The ASIC Enforcement Review Taskforce (Taskforce) is seeking to enhance ASIC’s banning powers, to ensure ASIC can take action to ban senior managers from managing financial services business.
The Taskforce has made two key recommendations to increase the banning powers.
1. Whilst ASIC currently has the power to ban a person from providing financial services, the Taskforce has recommended the powers be broadened to allow ASIC to ban a person from:
- Performing a specific function in a financial services business, including being a senior manager or controller of a financial services business; and/or
- Performing any function in a financial services business.
2. The Taskforce has also recommended that the grounds for ASIC’s power to ban should be expanded to include:
- Where ASIC has reason to believe that the person is not a fit and proper person, or adequately trained, to provide financial services (or to perform the role of officer or senior manager in a financial services business).
- Where a person has more than once been an officer, partner or trustee of a financial services or credit licensee that has been:
- The subject of a report by the Australian Financial Complaints Authority regarding a failure to comply with a determination of that authority; or
- A corporation that was wound up and a liquidator lodged a report under section 533(1) of the Corporations Act about the corporation’s liability to pay its debts.
- Where a person has breached their director or officer’s duties under the Corporations Act (sections 180, 181, 182 or 183).
Enhancing ASIC’s banning power was originally flagged in the final report of the 2014 Financial System Inquiry, where it was considered that enhanced banning powers would improve accountability of managers and corporate culture.
Whilst at first glance the changes appear aimed at targeting those who occupy senior roles in banks, if they go ahead, the recommendations will apply to the financial services sector generally.
The Taskforce has released a consultation paper on its recommendations and submissions will close on 4 October 2017.