Although the PJC inquiry into financial products and services had not yet reported its findings and recommendations at the time of writing, the ASIC submission to the inquiry provided a clear indication of the likely direction of regulatory reforms in the licensing area. ASIC has proposed that the licensing power be broadened to refuse an application, or remove a licensee, on the grounds that the licensee may not comply with their obligations, as opposed to the current higher threshold of will not comply. ASIC has also proposed that a 'fit and proper' test be applied to individuals providing services. Another critical proposal that has been put forward by ASIC is the tightening of financial resources requirements. The Government is determined to clean up the financial services sector and will not hesitate to impose a tougher regulatory regime to enhance consumer protection. Applicants and existing licensees cannot afford to be complacent.
MArkET TrEndS Tougher regulation is likely for AFS licensees and new applicants Existing AFS licensees and new financial services industry participants can expect a tougher and more onerous regulatory approach from ASIC in relation to new licence applications and compliance arrangements. Although thE PJC INquIry into financial the threshold test significantly, as ASIC can simply products and services had not yet reported its rely on a pattern of behavior in the past, or act on findings and recommendations at the time of writing, suspicion. This is an important development for the ASIC submission to the inquiry provided a clear licensees because, if enacted, it will alter the way indication of the likely direction of regulatory reforms compliance, the appointment process and in the licensing area. supervisory arrangements are carried out. This proposal means that ASIC would be able licensing proposals to look behind the entity, examine the conduct and ASIC has proposed that the licensing power be competency of the persons providing the financial broadened to refuse an application, or remove a services, and assess the application based on wider licensee, on the grounds that the licensee ‘may not sources of information. Grounds for ASIC to refuse a comply’ with their obligations, as opposed to the licence application or ban an individual may include current higher threshold of ‘will not comply’. ‘Will not factors such as the failure to comply with internal comply’ is extremely difficult to prove as it is almost guidelines, failure to comply with market operating impossible to demonstrate what a licensee would rules, or conduct that may amount to serious or would not do in the future. conflicts of interest (see ASIC submission, para. 97). In order to substantiate this case, it is fairly Other factors that could conceivably be taken into inevitable that evidence of repeated and ongoing account will be things like: non-compliance will be required to demonstrate the l failure to meet ongoing training requirements; licensee’s unwillingness or inability to comply in the future. ‘May not or is not likely to comply’ will lower l an unresolved complaint from client; l an imminent legal proceeding against the licensee; Su-KINg hII F Fin is the principal of Innoinvest Consulting.
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