The single disciplinary body: What you need to know

Changes to the disciplinary process

A disciplinary process flowchart provided by Treasury in addition to the draft legislation notes that a new “triage process” within ASIC will receive complaints and breach reports from AFCA, the TPB, industry associations and licensees. Matters will be progressed if there is a genuine case for misconduct, and will proceed to a full ASIC investigation and either banning or possible sanctions imposed on the adviser.

If a matter does not warrant banning, at least two members of the Financial Services and Credit Panel (FSCP) and an ASIC officer will be convened as a group to determine what other actions need to be taken against the offending adviser. The adviser will be notified of the penalty to be imposed against them and give the opportunity to make a submission or request a hearing with the panel. The adviser will also retain the option to appeal the FSCP decision to the Administrative Appeals Tribunal, and can apply with the FSCP to have a penalty notice reviewed or withdrawn.

Who will be caught by the new regime

The disciplinary process will apply to all retail advice providers that fall under the FASEA framework. Advisers involved in FASEA code breaches, as well as financial issues such as firms that are insolvent or have not responded to AFCA determination, and those who provide personal advice while not registered under the new disciplinary process (see below) will also be able to be sanctioned by the FSCP. 

The panel will not have the ability to consider retrospective matters before 2022.

Restricted civil penalty provisions

The legislation introduces a new penalty type, restricted civil penalty provisions, which can be infringed on advisers for failing to abide by the FASEA framework. The provisions amount to $2,664 per breach. The panel can also recommend ASIC apply for a civil penalty in some circumstances.

Enforceable undertakings can also be accepted by the FSCP as an alternative to any penalties imposed.

Expanded visibility of sanctions on the FAR

In addition to the current visibility of previous adviser banning orders on the financial adviser register, the FSCP may request that ASIC add details of any penalties imposed against an adviser as a result of disciplinary action, including warnings, court declarations or enforceable undertakings.

New obligations for licensees and advisers

Under the disciplinary body process, licensees will need to submit a registration form for each of their authorised representatives declaring that the adviser is fit and proper and has met the training standards. Sanctions can be imposed on licensees for providing misleading information in the forms or for not registering an adviser while they are an authorised representative.

Licensees will have until the end of 2022 to register all their authorised representatives under the scheme. Registration needs to be renewed annually, but the fees payable have not yet been released.

The new registration will replace the need for advisers to be registered with the TPB, but advisers will still need to comply with TPB education requirements. If an adviser has registered with the TPB beyond 1 January 2022 their registration will count as their ASIC registration under the new regime.

The legislation also appears to remove the need for advisers to belong to a recognised professional association as part of their licensing or TPB requirements, with associations to no longer be recognised under the TAS Act or Corporations Act. FASEA will also be wound up as a body on 1 January 2022.