ASIC “looking more closely at aged care, financial management”

A taskforce charged with reviewing ASIC’s enforcement powers has recommended drastic increases in financial penalties in place to address corporate and financial sector misconduct.

According to business reports, the taskforce noted inconsistencies and inadequate deterrents in the current model, and has proposed to increase maximum penalties for both civil and criminal cases under the Corporations Act 2001.

In the case of corporations, it has recommended a maximum civil penalty be set at $2.65 million or three times the value of benefits obtained or 10 per cent of annual turnover (whichever is higher).

The taskforce also called for criminal offences under the Corporations Act to attract a maximum of 10 years imprisonment, $945,000 in fines or an amount three times the benefits gained in the case of individuals.

For criminal offences, in the case of corporations it was recommended the most serious offences attract fines of $9.45 million, three times the benefits gained or 10 per cent annual turnover.

Meanwhile the Deputy Chair of ASIC, Peter Kell, said in an interview, the announced regulatory reforms of financial advice “have been directed primarily at lifting the standards of individual advisers, improving the quality of advice and “driving out the problem players” to help improve trust and confidence in the industry.”

“ASIC recently has been looking at aspects of advice in the interface between financial management and aged care,” he said.

“These are areas that, because of the ageing population, will be crying out for a profession that can deliver value for money and help people during that phase of their life.”

“At the moment that’s, I think, under-catered for, and there’s enormous potential for the sector to rebalance its offerings.”

Mr Kell said it would be increasingly important for financial advisors to take a more long-term approach with clients and think more about creating multi-generational client relationships, as individuals may be in decumulation for many years after retirement.

“You’ll be dealing with a client and potentially their adult children – or the other way around, the adult children and their ageing parents – in ways that can make a huge positive difference to people’s lives,” he said.

“There’s no doubt to my mind that’s a gap at present. It’s a very challenging area because, perhaps more than most others, there’s an emotional element to it when you’re potentially advising people on what to do with their house or issues that may impact on the inheritance.

“But that’s what this sector, if it works well, ought to be able to do.”

“The issues we’ve been talking about are not going to mysteriously become less complicated over the next 10 years – the way people have to think about their retirement planning, their superannuation, how they care for relatives and how they cover their own health costs, and so on,” Mr Kell said.

“You would imagine the need would continue to be there. The question is how can you cover that off? The industry is grappling with how to have a model that doesn’t require you to sell something at every point in the process. That will become increasingly a thing of the past.”

The Taskforce has invited comment from interested stakeholders on its position paper regarding penalties by 17 November 2017.


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