Financial services providers under regulator scrutiny are better off working with the regulator to resolve the issue rather than panicking and heading to a lawyer, one legal team has advised.
“The first thing businesses need to do when served with a notice, is to keep calm and not panic,” said The Fold senior lawyer Dr Hillary Ray.
Businesses shouldn’t underestimate how helpful the Australian Securities and Investments Commission (ASIC) can be if approached the right way, she said.
Businesses need to start preparing for an investigation, and work out who they’re dealing with at ASIC as there are many different sections, she said.
“We recommend businesses do a triage and look at the conduct or product that is at issue,” Ms Ray said. “It may be something that can be remedied relatively easily, for example by putting together a robust compliance plan that includes communicating with clients.”
It may often be better to engage a commercial lawyer rather than a litigator, she advised.
“Lawyers bring an extra set of eyes to the business and can also help to set out and prioritise the issues, review processes and assist with strategy. On the contrary, litigators can be quite aggressive and adversarial and may not be well-suited to meeting with the regulator if they are not trying to resolve the issues, but want to fight on.”
However, commercial lawyers will seek common ground upon which to forge a deal that both parties can live with, which is a better approach for a frank discussion with the regulator, according to Ms Ray.
She also advised self-reporting any potential regulatory issues and discussing new products or offerings with the regulator beforehand.
“ASIC does not expect every business to exist without a breach. However, they like proactive stakeholders who deal with breaches as manageable occurrences,” she said.
