ASIC and APRA will be able to use evidence collected by the upcoming royal commission to ban individuals from the industry, warns law firm Dentons.
While evidence collected in the upcoming financial services royal commission cannot be used against those giving evidence in either criminal or civil cases, it is available to regulators, according to Dentons.
Speaking to financial services professionals in Sydney on Wednesday, partners John Dalzell and Ben Allen from Dentons — which rebranded from Gadens Sydney in December 2016 — acknowledged that those who appeared in the royal commission into banking and financial services would have some “element of protection”.
“That evidence that you give in the royal commission cannot be used against you in civil or criminal proceedings that happen after the royal commission,” Mr Dalzell said.
Additionally, there would be penalties of imprisonment of up to 12 months if individuals were sacked for appearing in or giving evidence to the royal commission.
However, he pointed out that these protective measures did not affect the ability of financial regulators such as ASIC or APRA to exercise their powers.
“[The protections don’t] include hearings that are brought to ban you by ASIC, APRA, and administrative proceedings by any of the regulators,” he said.
“They're not affected by that – in other words, they can use your evidence against you in any administrative hearing that occurs after that.”
Outlining the terms of reference, Mr Allen said the royal commission’s focus centred on five areas: misconduct (where community standards had not been met); the handling of consumer complaints; the adequacy of existing laws; the efficacy of the regulator; and the efficacy of the legal framework.
But, more significantly, he pointed out, was the “number of striking omissions or exclusions that have been carved out” of the terms of reference.
“The terms of reference specifically limit the scope of the inquiry, and they include things such as saying the commission isn’t required to inquire into or make any recommendations in relation to macro-prudential policy,” Mr Allen explained.
“That means any policy of regulation or government that is concerned with containing systemic risk which can have widespread implications for the financial system as a whole beyond simply the banking system.”
The banking royal commission has also been asked not to duplicate or compromise inquiries into the sector that had already occurred or were currently occurring, given the number of inquiries that had already been conducted in the sector in previous years, he said.
“Finally, and somewhat unhelpfully, the terms of reference also state that the commission may choose not to inquire into any other matters that the commission doesn’t want to inquire into,” Mr Allen said.
The partners also advised financial services professionals to devise a strategy in dealing with the royal commission and to attend relevant hearings in Melbourne that would inform the best choice of witness to give evidence to the commission.
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