ASIC commissioner Danielle Press

The corporate regulator has confessed to a lack of clarity around how the government’s Single Disciplinary Body (SDB) panels will work, with commissioner Danielle Press revealing that ASIC is unsure about the circumstances that will require a panel to be convened and how the associated costs will be managed.

At an August 27 Parliamentary Joint Committee hearing into ASIC, liberal MP Bert van Manen asked Press about its plans for the Financial Services and Credit Panel (FSCP) and how it will operate under the new SDB regime.

“What we don’t have any idea about, or what we are waiting for is when the panel needs to be convened,” Press revealed.

The FSCP panels are set to become a central cog in the government’s plan to carry out recommendation 2.10 from the Hayne royal commission by setting up the SDB and a new registration system for financial advisers.

The reform will replace the current interim arrangement for licensees to monitor advisers’ compliance with the Code of Ethics, which observers have derided as rife with cross-purpose and an “afterthought” for licensees.

But while the reform is set to come into force on January 1, details are still being finalised and submissions to the Better Advice Bill draft regulations are being accepted until mid-October – which means ASIC has little certainty around which to plan the measure’s implementation.

Policymakers have made it clear that understanding the FSCP’s role is a key aim of the consultation process, with financial services minister Jane Hume identifying “setting criteria for when ASIC must refer disciplinary matters to the SDB” as the top concern.

Until then, the corporate regulator remains in the dark about the FSCP will operate.

Justifiably nervous

Traditionally, FSCP panels are set up to be used in situations where serious breaches need to be assessed, or, as ASIC says, when a matter is appropriate for peer review “because of its significance, complexity or novelty”.

If the draft regulation goes through unchanged, however, a much broader swathe of breaches could be brought before a panel. With no idea how many breaches of the Code of Ethics to anticipate, ASIC seems justifiably nervous.

“At the moment, in the way it’s currently drafted, there’s little flexibility for us to not convene a panel if we come to a position that there has been a breach of the code or the law,” Press said at the PJC hearing. “What we don’t know is when we will need to convene a panel in all circumstances.”

Cost alone should be a major deterrent in having the paramaters for FSCP panels kept broad, especially given the intense focus on ASIC’s spending after successive increases to the adviser levy. Panels will consist of two members external to ASIC who will be paid a rate “either to be determined by the Remuneration Tribunal or the minister”, ASIC says, plus a senior ASIC staff member and any ASIC staff providing administrative support.

“Sitting behind this are the costs incurred in the course of ASIC’s investigation of the matter,” ASIC adds.

 

One comment on “ASIC: ‘No idea’ when advice disciplinary panels should be convened”
  1. Avatar
    Tony Simmons

    No idea! Well that sort of sums up the whole financial services regulatory mess.
    Prior to the licensees being responsible for ethical conduct ( aka the lunatics in charge of the asylum) a plausible solution for oversight of conduct and professional behaviour was offered. This involved a group of professional associations who knew and understood the financial services advise landscape better than anyone else.
    I was of the opinion that this would work well.
    Instead it was as an interim measure left to licensees a large number of which needed to be significantly disciplined themselves, for lack of ethics and professional standards.
    So we go from a sensible idea to a really bad idea to ASIC that has no idea.
    It’s all a bit too much.

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