ASIC Viewpoint: Enhancing administrative decision-making processes in financial services regulation
Published by the Australian Financial Markets Association in AFMA Member News, April 2017.
We have begun consulting on a proposal to establish a Financial Services Panel that is aimed at enhancing our administrative decision-making processes by adding a strong element of peer review.
Peer review is a form of co-regulation in Australia and overseas. 'Co-regulation' refers to circumstances where the administration and enforcement of regulatory obligations occur in collaboration with industry. Effective co-regulation:
- utilises the expertise of the regulated population
- is potentially more flexible and adaptable (making it suited to monitoring and dealing with market and technical innovations), and
- is more likely to secure the cooperation of the regulated population.
The Markets Disciplinary Panel is an example of another peer-review body that was established by ASIC to consider disciplinary action for alleged breaches of market integrity rules.
What will the proposed Financial Services Panel do?
ASIC has a wide range of administrative powers, including the power to make a banning order; issue infringement notices; and cancel, suspend or vary Australian financial services licences and credit licences.
Under the proposals in Consultation Paper 281 Financial Services Panel, the panel would initially be responsible for determining whether we should ban individuals from the financial services and credit industries for misconduct. ASIC would select matters and refer them to the panel where they are significant, complex or novel.
Over time, we may expand the range of matters that the panel will make decisions on.
What are the benefits?
The Financial Services Panel will bring broader experiences and perspectives into ASIC’s decision making and ensure decisions reflect current industry practices and standards. It will be made up of financial services and credit industry participants and non-industry participants (e.g. lawyers or academics) with relevant expertise, and at least one ASIC staff member.
We anticipate the proposed Financial Services Panel may assist with improving regulatory outcomes by:
- ensuring that ASIC’s administrative decisions are based on a thorough understanding of current industry practice and standards
- bringing a broader range of experiences and perspectives into the decision-making process
- increasing awareness of the decisions being made by ASIC and the standards they set, and
- potentially increasing the significance of decisions – both for the individual who is subject to the potential banning, and for other market participants – when these decisions are made with peer involvement.
We’re seeking your feedback on the following:
- How would the panel enhance the impact of ASIC’s administrative decisions?
- What types of matters should be referred to the panel?
- What is the optimal composition of the panel?
Submissions to our proposals in Consultation Paper 281 are due by 23 May 2017.