ASIC denies adviser banning KPIs

ifa reported yesterday that a number of sources involved in the collapse of licensee Protect Ensure have come forward to accuse ASIC of unfairly banning financial advisers to hit targets.

In response, an ASIC spokesman told ifa the regulator does not have any KPIs that affect its decision on when to take banning action. 

ASIC must first consider a number of factors set out in Regulatory Guidance 98 Licensing: Administrative action against financial services providers, the spokesperson said. 

These factors include: whether ASIC has jurisdiction in the matter, the strategic significance of taking action, the benefits of pursuing misconduct, issues specific to the case and alternatives to formal investigation.

“ASIC will move to ban an adviser if considered necessary,” the spokesman said.

“Decisions in relation to taking banning actions are not subject to performance measurement-related considerations.”

In response to allegations that the banning process leaves advisers without a fair opportunity to defend themselves, ASIC said that the Corporations Act sets out the relevant procedural requirements for a banning order to be issued.

“The mandatory procedures require ASIC to give a person an opportunity to appear, or be represented, at a hearing that takes place in private, and to make submissions to ASIC before a banning order is made, except in limited circumstances (e.g. when the person ASIC is banning has already been convicted of serious fraud),” the spokesman said.

“The hearing is conducted by a hearing delegate who is independent from the operational team that carried out the review and investigation of the relevant banning matter.

“These procedures ensure an individual is given a fair opportunity to defend his or her case.”

As for whether ASIC believes there are better alternatives than just blanket bannings to deter bad financial adviser from the industry, the spokesman said the federal government and the advice industry are actively progressing measures to professionalise the industry.

However, the spokesman added that it is still important that ASIC, as a regulator, is able to take action against financial advisers who refuse to or are incapable of complying with the standards and regulations of the advice industry.

“ASIC’s experience is that an individual financial adviser can cause significant harm to a considerable number of vulnerable consumers,” the spokesman said.

“In such cases, it is imperative that ASIC can take actions to stop the financial adviser from causing further harm to consumers.”

This story is part of a widespread investigative feature on ASIC enforcement activity to be published in the March edition of ifa magazine.

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].