In October, the government passed the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021, in response to recommendation 2.10 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The legislation establishes the Financial Services and Credit Panel (FSCP) as the single disciplinary body for financial advisers. The FSCP will also be able to hear complaints about an adviser’s compliance with the financial services laws and the Code of Ethics.
The panel will be chaired and assisted by ASIC and made up of members of the industry. The reforms in the act commence on 1 January 2022.
In an update released this week, ASIC stated that the powers of the FSCP under the act include the power to direct financial advisers to undertake specified training, counselling or supervision and to report certain matters to ASIC.
The FSCP may also suspend or cancel a financial adviser’s registration, issue infringement notices in specified circumstances, recommend that ASIC commence civil penalty proceedings and enter into enforceable undertakings with financial advisers.
From 1 January 2022, ASIC must convene the FSCP in circumstances prescribed by the Financial Sector Reform Amendment (Hayne Royal Commission Response—Better Advice) Regulations 2021, made on 20 December 2021.
Under these reforms, ASIC must convene the FSCP where it reasonably believes that a financial adviser is not a fit and proper person to provide advice or a financial adviser becomes an insolvent under administration, and ASIC is aware of this.
In addition, ASIC must issue a warning/reprimand in relation to certain misconduct.
The corporate regulator said it would only issue a warning or reprimand or make a referral to the FSCP where it has formed the reasonable belief after carrying out its usual triaging, investigatory work and referral processes.
“This means that not all concerns about the conduct of financial advisers that come to ASIC’s attention will result in ASIC issuing a warning/reprimand or a referral to an FSCP,” it said in the update.
ASIC also stated that it would consult on guidance regarding the operation of the FSCP in early 2022.
“We will also release guidance about how ASIC will exercise its new power to issue warnings/reprimands in early 2022,” the corporate regulator stated.
