the The Financial Services and Credit Panel is expected to receive new powers as of January 1, 2022.
The Financial Services and Credit Panel (FSCP) – a panel of participants from the wealth and credit sectors that assists the Australian Securities Investments Commission (ASIC) in making administrative decisions on certain matters relating to retail financial services and activities of credit – will receive statutory functions and powers from next year.
The move takes place following the Regulations Amending Financial Sector Reform (Hayne Royal Commission Response — Best Advice) 2021 be done this month.
While the panel ceased operations in July this year in anticipation of the reforms, the inipeer review committee included several members of the credit industry, such as Don Crellin, managing director of brokerage firm Resolve Finance. As a result, there are currently no members of the FSCP.
The panel was originally formed to hold administrative hearings and decide whether to issue restraining orders against individuals for misconduct in providing financial services to retail customers or in credit activities.
Each panel of the new FSCP will consist of an ASIC staff member, who will chair the panel, and at least two industry participants. The pool of industry participants will be appointed by the minister responsible for administering the Corporations Act.
In addition, from next year the panel will have new powers, which largely relate to financial advisers but also cover certain credit activities.
These will allow it to deal with a wider range of circumstances, including less serious misconduct by financial advisers.
For example, the FSCP will have the power to order financial advisers to undertake specific training, advice or supervision and to report certain matters to ASIC.
The FSCP may also suspend or cancel the registration of a financial adviser; issue infringement notices in specific circumstances; recommend that ASIC initiate civil proceedings; and enter into binding agreements with financial advisers.
These new powers are intended to implement a recommendation made by Commissioner Kenneth Hayne to the Royal Banking Commission (Recommendation 2.10: New Disciplinary System for Financial Advisors).
When an FSCP is summoned
Under the new rules, from January 1, 2022, ASIC must convene an FSCP when certain circumstances arise (as prescribed by regulation) and when ASIC has not exercised, and does not propose to exercise, any of its powers under company law against the relevant supplier depending on the circumstances.
This can include where the provider concerned has, at least twice, been linked to a refusal or non-execution of a decision taken by the AFCA relating to a complaint relating to credit activities (within the meaning of National Consumer Credit Protection Act 2009) and ASIC reasonably believes that the denial or failure is involves dishonesty or fraud, or has resulted or is likely to result in property loss or damage to a customer of the relevant supplier; or has resulted or is likely to result in a material benefit to the supplier concerned.
For wealth advisers, this can be triggered when they reasonably believe that a financial adviser is not a fit and suitable person to provide advice or a financial adviser becomes insolvent under administration and ASIC is aware. In addition, the ASIC must issue a warning/reprimand in relation to certain fouls.
ASIC said it would proceed with issuing a warning/reprimand or referral to an FSCP only if they have “formed reasonable belief after completing their usual triage, investigation and referral processes. “.
As such, not every concern brought to ASIC’s attention will result in ASIC issuing a warning/reprimand or referral to an FSCP.
ASIC said it would consult on guidance regarding the operation of the FSCP in “early 2022”, when it issue guidelines on how ASIC will exercise its new power to issue warnings/reprimands in early 2022.
[Related: ASIC demands review into ANZ home loan referrals]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian brokerage industry, the mortgage market, financial regulation, fintech and the wider lending landscape, Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser webcasts. Live.