Although recent ASIC enforcement action and the Royal Commission have predominantly focused on the major banks and AMP, it would be foolhardy to assume that non-bank advice firms are not a focus. Patterns emerging teach us that you are the next focus.
How do we know this?
Well, ASIC’s modus operandi is to first investigate potential regulatory issues within big targets - where misconduct is widespread and evidence is easy to find. This serves as a learning exercise, helping ASIC to ascertain the nature and scale of misconduct, and what to look for.
Investigation complete, ASIC generally releases a report on its findings and concerns. You’d expect that diligent compliance teams would read those reports, look within for similar problems, notify ASIC of any breaches and start a clean-up.
That’s what ASIC hopes for too. But, if no one falls on their swords - and the past few years have demonstrated how reluctant licensees are to do so – ASIC brings out the big guns of enforcement.
Naturally, they’ll start with the big AFSLs, who’ve proven to be easy to make examples of.
But here’s the rub. By the time that work is nearing completion, ASIC has a template for investigating smaller players. They know what to look for, where to find it, what questions to ask – and they have a standard methodology for doing so.
It goes like this:
If ASIC finds breaches which haven’t been voluntarily reported, enforcement action will follow, as night follows day.
So reading the tea leaves to be found in ASIC’s Corporate Plan for 2017/18 to 2020/21, its Enforcement Outcomes report for Jul-Dec 2017 and the carnage emerging from the Royal Commission, here’s a snapshot of what non-bank financial planners, accountants and life advisers should be looking for in their businesses - because if you don’t ASIC will!
In the second half of 2017, ASIC’s enforcement actions resulted in criminal penalties, civil remedies, enforceable undertakings and administrative action, demonstrating the breadth of its powers. Indeed, ASIC has banned over 100 financial advisers in the last three years alone.
If you’re not sure whether your business is at risk, or if you receive an ASIC notice, it’s best to get on the front foot. Having helped many financial advice firms with breach and enforcement matters, The Fold’s regulatory experts can assist you to do so. Contact us, we’re always happy to help.
Author: Claire Wivell Plater