Published On: Fri, Nov 19th, 2010

ASIC Releases Updated Guidance on Administrative Powers to Enforce Financial Services Legislation

ASIC has released November 18 updated guidance on how it will use its administrative powers to enforce the financial services legislation, including its new markets supervisory powers.

ASIC has updated Regulatory Guide 98 Licensing: Administrative action against financial services providers (RG 98), which outlines how ASIC uses administrative remedies to enforce the compliance of Australian financial services (AFS) licensees – and their representatives – with the financial services legislation.

This updated version of RG 98 does not represent a substantive change to ASIC’s approach to using its administrative powers, but includes additional sections on ASIC’s new powers to supervise market participants. That is, for AFS licensees who are market participants – in addition to the general remedies – ASIC may also ask the Markets Disciplinary Panel (MDP) to issue an infringement notice.

Compliance with an infringement notice may involve the payment of a penalty, undertaking remedial measures, accepting sanctions or entering into an enforceable undertaking.

ASIC’s policy on the role and operation of the MDP is set out in Regulatory Guide 216 Markets Disciplinary Panel (RG 216).

While each matter is assessed on a case-by-case basis, the non-prescriptive factors and examples contained in RG 98 are intended to provide transparency as to how ASIC determines the most appropriate regulatory response in each case.

Background
ASIC has a range of remedies available to it under the financial services legislation, including taking criminal, civil or administrative action. ASIC’s administrative remedies include:

* suspending or cancelling an AFS licence;
* issuing an order banning a person from providing financial services (banning order), or;
* accepting an enforceable undertaking as an alternative to other remedies, where ASIC considers it appropriate to do so; and
* asking the MDP to issue an infringement notice.

RG 98 indicates the matters ASIC takes into account in determining whether administrative action is the most appropriate regulatory response.

It also provides some indicative guidance on the kinds of factors ASIC will consider when determining the length of a banning order, including examples of relevant misconduct for illustration.

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