ASIC needs tougher, direct powers: Taskforce

ASIC should be given tougher intervention powers to direct how an Australian financial services licensee addresses or prevents compliance failures.

The latest report from the ASIC Enforcement Review Taskforce highlights several shortcomings the corporate regulator requires to restrict certain activities and have licensees adopt internal systems.

The Taskforce found massive delays exist from the time a concern arises, restrictions are imposed or a licence is suspended, to achieving a protective outcome - resulting in lengthy hearings and surveillance periods.

Applying to a court for an injunction also involves significant time, resources and costs in investigating and preparing a case, together with enforceable undertakings, which must be agreed to by a licensee and are generally negotiated, the report noted.

The Taskforce also raised concerns about licensees taking steps to rectify compliance issues, with ASIC not having the necessary measures to ensure the impact on clients is identified or actually remediated.

"For example a licensee may make appropriate amendments to its systems and processes to address how a breach occurred but has not established an appropriate remediation program to assess whether compensation is payable to consumers affected by the breach," the Taskforce said.

In identifying these issues, it recommended ASIC have the power to direct how a financial services or credit licensee should conduct itself to address or prevent compliance failures.

ASIC also should be able to apply to a court to enforce the direction and take administrative action if an AFS or credit licensee does not comply with a direction.

Minister for Revenue and Financial Services Kelly O'Dwyer said the proposed directions power would allow ASIC to take steps to protect consumers by preventing harm before the damage is done.

This is the eighth paper released by the ASIC Enforcement Review Taskforce; the one prior urged the Federal Government to give ASIC "stronger regulatory tools" to deal with misconduct that occurs in the financial markets and financial services sectors.

It proposed huge increases in civil penalties for individuals from $200,000 to $525,000, as well as lengthy prison times.

A final report is due at the end of November.

Read more: ASICASIC Enforcement Review TaskforceFederal GovernmentKelly O'Dwyer
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