FAAA urges early ASIC intervention, not interference

Mike Taylor

Managing Editor and Publisher

22 October 2025

The financial services regulatory regime should place more focus on early intervention to avoid major issues and less focus on interfering with the efficient operation of well-intentioned businesses, according the Financial Advice Association of Australia (FAAA).

The FAAA has told the Australian Securities and Investments Commission (ASIC) that the recent collapses of a number of managed investment schemes and other investments has placed a spotlight on the importance of regulatory oversight and early intervention.

As well, the FAAA has told ASIC that it needs to do more than just talk about regulatory reform in circumstances where prior consultations (in 2020) have resulted in nothing tangible happening.

It has also sent a clear message that the shape of the financial advice profession since the Royal Commission demands that ASIC “should adapt to this new environment by re-framing its regulatory guidance for the financial advice sector, pitching the guidance at the increased audience of financial advisers that now rely directly on their own readings of ASIC’s guidance.

Responding to ASIC’s consultation around Regulatory Simplification, the FAAA said that whilst law reform and other changes are likely to be necessary to address a number of gaps that have been identified, the existing law does enable appropriate enforcement to a significant extent.

“It is our view that the regulatory regime should place more focus on early intervention to avoid major issues and less focus on interfering with the efficient operation of well-intentioned businesses,” it said. “It is important that strong regulatory enforcement action is taken with respect to these matters to provide a clear message to strongly discourage similar conduct in the future.”

“It is important that ASIC takes meaningful action as a result of this consultation. In November 2020, ASIC released Consultation Paper 332 on Promoting access to affordable advice for consumers. In total 466 submissions were received from financial advisers, licensees, associations and other relevant stakeholders in response to this consultation,” the FAAA said.

“To the best of our understanding, very little reform occurred as a result of this consultation. Whilst some of the ideas were passed on to the Quality of Advice Review, it seems to those who did so much work on CP 332, that very little actually happened. It is essential that meaningful change flows from this consultation.”

The FAAA also used its response to the ASIC consultation to point to disproportionate pecuniary penalties particularly with respect to what represent minor and technical misdemeanours.

“An example recently is AFSLs being fined more than $30,000 for what amounts to a misunderstanding, leading to an administration mistake when authorising and registering new authorised representatives. This mistake is generally unintended and a consequence of a transitional legislative arrangement resulting in an illogical double ASIC notification requirement,” it said.