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Broaden ASIC banning powers: Report

Broaden ASIC banning powers: Report

The corporate regulator could soon have increased power to ban "unfit" senior managers, directors and officers of financial services companies. This is the key recommendation the ASIC Enforcement Review Taskforce flagged in its sixth report aiming to reform the regulator's banning powers of individuals working in the financial services and credit sectors.

ASIC can currently prevent individuals from providing financial services and cancel an AFS license - it cannot stop them from managing a financial firm or remove individuals involved in managing a firm that may have a culture of non-compliance, the consultation paper noted.

ASIC should be able to ban an individual from performing a specific function in a financial services business if it has reason to believe they were not fit and proper, adequately trained or competent in performing the role at senior level capacity, the taskforce said.

The taskforce used similar examples overseas whereby in the UK the Financial Conduct Authority (FCA) can exercise its power to prohibit an individual who is not fit and proper in carrying out their duties.

In March 2016, the UK Government introduced the Senior Managers Regime (SMR) and Certification Regime in the banking and insurance sector, which puts the onus on the senior employees to prove they are being accountable for their actions.

Federal Revenue and Financial Services Minister Kelly O'Dwyer welcomed the proposals, adding ASIC's increased powers is a 'game changer' in terms of accountability in financial services and complements the Banking Executive Accountability Regime (BEAR) currently being established.

"The [BEAR] will ensure banks and their senior executives and directors are held accountable when they fail to meet community expectations, including through stronger powers for APRA to remove and disqualify senior executives and directors and through new civil penalties," O'Dwyer said.

"The Government and the community are demanding better from those who occupy senior roles in banks, and the financial services sector generally."

The ASIC Enforcement Review Taskforce was established by the Turnbull Government in October 2016.

It is seeking community and industry feedback on its sixth consultation paper until October 4, prior to making its final recommendations late this year.

This article was first published by

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