Planners: choose your battles wisely

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Last week the AOIFP announced plans to create a central fund and fight unfair rulings by ASIC. This week, The Fold Legal senior lawyer Dr Hillary Ray says that working with ASIC after a breach might be a better, quicker way for financial services businesses to get back on track.

“Many businesses panic when ASIC serves them with a notice,” Ray said. “A smarter strategy may be to put themselves in ASIC’s shoes and work with them to resolve the issue. Businesses shouldn’t underestimate how helpful the regulator can be if approached the right way.”

She said businesses needed to learn to stay calm when served with a notice, then start preparing for the investigation – finding out who they are dealing with within ASIC, as different sections within the regulator will have different approaches.

At various stages along the way, if a business needs legal advice, Ray suggests engaging a commercial lawyer rather than a litigator.

“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,” she said. “However, 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. 

“Commercial lawyers, on the other hand, seek common ground upon which to forge a deal that both parties can live with.  This style is better-suited for a frank discussion with the regulator.”

Ray’s top tips for financial services businesses:

  • Revisit business strategies to be reminded of goals, objectives and the needs of clients
  • Perform triage – look at the conduct or product that is at issue, it might be something that can be remedied relatively easily
  • Self-report any potential regulatory issues. “ASIC does not expect every business to exist without a breach, however, they like proactive stakeholders who deal with breaches as manageable occurrences
  • Discuss new products with the regulators to iron out any potential breach and educate the regulator on the direction of products, technology and software

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