26 September 2003

Scare Tactics Used to Cash-In on Financial Service Licences

Some lawyers and consultants were using scare tactics and charging companies exorbitant fees to complete financial services licence applications ahead of next year's March 11 deadline, the Parliamentary Secretary to the Treasurer, Senator Ian Campbell, said today.

He said fees up to $65,000 had being charged to prepare applications and one consultant was charging $8000 just to review applications before they were submitted to the Australian Securities and Investments Commission.

"The flow of applications into ASIC is growing rapidly, but these tactics have caused some companies to hold off applying because they think the process is highly complex and will cost them a lot of money," Senator Campbell said.

"There will be some applicants who will need to seek advice about some technical issues because they have special characteristics, but most can prepare their own applications using the guidance issued by the regulator, ASIC, and industry associations.

"ASIC has a very efficient system in place to handle queries - a dedicated email, infoline, workshops, booths at industry forums and how-to-do-it literature.

"There is no compelling need to hire a lawyer or consultant and companies should ignore any suggestions to the contrary."

Senator Campbell said some of the scare tactics included claims that:

  • Applications were so complicated that only specialists understood them.

  • ASIC rejects applications prepared by companies themselves.

  • ASIC would revoke licences for the slightest breach, but this risk would be removed if applications were prepared by lawyers.

"The reality is hundreds of applicants have not used consultants and most have benefited from doing it themselves because they now understand the ongoing obligations of having a licence," Senator Campbell said.

"Suggestions that ASIC is hell-bent on revoking licences for even minor breaches is completely unfounded. Licences will be revoked only where there are major systemic problems or a reckless disregard for the law.

"ASIC is taking a practical approach to the implementation of the Financial Services Reform Act. It is well understood that some people still have issues that require attention. The Government is committed to resolving all issues in a practical way that achieves the goals of the policy without placing an unnecessary burden on business."

Senator Campbell urged companies to use ASIC's updated industry-specific guides and related advice on www.asic.gov.au/afsl, email the Infoline on infoline@asic.gov.au or call 1300 300 630.

He said companies should submit their applications as soon as possible to avoid last-minute hitches before the 11 March 2003 start-up. There would be no extension of the deadline.

PERTH

26 September 2003

Contact: Wayne Grant 08 9421 1755 or 0407 845280