ASIC updates guidance for ‘warnings and reprimands’
ASIC has just released an information sheet allowing it to issue warnings and reprimands to financial advisers that do the wrong thing. If you’re a financial adviser, you’ll definitely want to take note of the key messages from the document.
As part of the Hayne Royal Commission Response – Better Advice Act 2021, a requirement was for ASIC to issue warnings and reprimands to financial advisers in “specified circumstances.” In other words, when a financial adviser has breached financial services laws. ASIC has today released Information Sheet 270 Warnings and Reprimands (INFO 270) which explains what warnings and reprimands are, and what they involve. INFO 270 explains:
- warnings and reprimands are
- when ASIC will give a warning or reprimand
- how ASIC will communicate the giving of a warning or reprimand
- when and to whom ASIC will provide procedural fairness before giving a warning or reprimand, and
- the adviser’s right of review of ASIC’s decision to give a warning or reprimand.
Just to summarise, a warning or reprimand is a letter sent by ASIC to an adviser warning against continuing the conduct or circumstances that led to the warning, and a reprimand will admonish the financial adviser in relation to the conduct or circumstances that have already ceased. ASIC provides a statement of reasons to the adviser in both instances.
When will ASIC issue a warning or reprimand?
Not every concern leads to a warning or reprimand, but it should be noted that ASIC conducts its own investigation and referral process. At the end of it, if the outcome is that the regulator believes that a warning or reprimand circumstance exists, then a financial adviser can expect ASIC to:
- exercise its other powers under the Corporations legislation (e.g. to impose a banning order or accept an enforceable undertaking)
- convene a sitting panel of the Financial Services and Credit Panel (FSCP), or
- give the financial adviser a warning or reprimand.
Here is a table that contains possible warning or reprimand circumstances a financial adviser can contravene: