Lawyers attack watchdog planJanuary 12, 2012ASIC.Too much power:...

Lawyers attack watchdog plan
January 12, 2012

ASIC.

Too much power: The Law Council warns ASIC should not have increased powers to refuse or cancel financial services licences. Photo: Peter Braig

THE Law Council has warned that a proposal to boost the power of the corporate regulator to refuse or cancel financial services licences goes too far and should be reeled in.

The council, which represents 56,000 lawyers Australia-wide, argues that the federal government plan gives too much discretion to the Australian Securities and Investments Commission over who should be allowed to hold a financial services licence - required to run any sort of financial services business in Australia.

ASIC says it needs the powers to better protect investors from unscrupulous operators, saying current laws make it too hard to cancel a licence or to refuse to grant one.

The plan is part of the federal government's future of financial advice (FOFA) reforms, which aim to strip out conflicts of interest in financial advice and better protect retail investors following the Storm Financial and Trio Capital collapses...



At present, ASIC can immediately suspend or cancel a licence only in limited circumstances - such as if the licensee is insolvent or convicted of serious fraud.

ASIC can also seek to cancel a licence after a hearing, but again only in certain cases - including if licensees have failed to meet their obligations, or if ASIC has reason to believe that licensees ''will not comply'' with their obligations in the future.

ASIC's decision can be appealed before the Administrative Appeals Tribunal, where - ASIC has argued in its own submission - it has struggled to prove its case. ASIC says it is similarly hamstrung in its ability to refuse a financial services licence.

The new laws will allow ASIC to refuse or cancel a licence if it believes a licensee is ''likely to'' breach obligations in the future - lowering the standard of proof. The Law Council says this gives ASIC too much discretion.

Read more: http://www.smh.com.au/money/lawyers-attack-watchdog-plan-20120112-1pwit.html#ixzz1jHpVhklz