NIBA is concerned by proposed
ASIC enforcement powers which would allow the regulator to intervene in real-time on potential AFS licence-holder breaches.
In a recently released position paper, entitled
ASIC’s Directions Power, ASIC’s Enforcement Review Taskforce states that the regulator should have the power to direct financial services licensees “in the conduct of their business where necessary to address or prevent compliance failures.”
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“The Taskforce considers that, to the extent practicable, ASIC should be able to require compliance with AFS or credit licence obligations in real time, and that the regulator should be given powers to direct licensees to take, or refrain from taking, actions where appropriate for this purpose,” the position paper notes.
Dallas Booth, NIBA CEO, said that the association is concerned the potential powers could allow action to take place without the burden of proof.
“We have got reservations about the power of direction,” Booth told Insurance Business.
“There is a document called
ASIC’s approach to enforcement which sets out the full range of ASIC enforcement power and capability, from infringement notices through to criminal prosecutions carrying jail sentences and a whole bunch of enforcement and regulatory options in between, and our concern is that the consultation paper does not assess areas where the regime was inadequate.”
Booth confirmed that NIBA has made a submission to the Treasury regarding the position paper.
The position paper also states that ASIC’s directions power should be triggered where a licensee has, is or will contravene AFS or credit licensing requirements and the regulator should be able to apply to a court to enforce directions if license holders do not comply. It has been welcomed by Kelly O’Dwyer, minister for revenue and financial services.
“The proposed directions power would allow ASIC to take steps to protect consumers by preventing harm before the damage is done,” Minister O’Dwyer said.
Booth noted that the proposed new powers could allow the regulator to intervene without full justification to do so and would not act as a deterrent to the broader market.
“Giving directions to an individual license holder will cause a reaction from the license holder but are unlikely to give deterrent effects to the broader market,” Booth continued. “The broader market will say ‘that is what they were doing and that is not us’. Deterrents arise from prosecutions, penalties and that is what we believe should happen.”
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