ASIC banning orders and personal conduct

ASIC has broad powers to sanction those involved in the financial services industry for contravening their legal obligations.

Those powers include imposing criminal and civil sanctions, as well as issuing banning orders prohibiting a person from carrying out a range of activities, such as providing financial services or being involved in any financial services business in any capacity. In assessing whether to pursue a banning order, ASIC will consider factors such as the nature and seriousness of the suspected misconduct, including any evidence of dishonesty.

While most banning orders stem from conduct during a person’s professional duties, a recent ban issued by ASIC is a good reminder it can pursue banning orders arising from private conduct unrelated to the provision of financial services. Here, partner Selina Nutley explains an important message for the financial services industry.

Private conduct

Mark Babbage was a financial adviser and had been an authorised representative and credit representative of various entities from 2013. Babbage travelled from Melbourne to the Northern Territory at a time Victoria was subject to travel restrictions. He then breached the mandated isolation requirements and falsely obtained a Northern Territory driver’s licence, tenancy agreement and bank account, before flying to Perth to watch the AFL grand final and celebrate with the victorious Melbourne Demons in their locker room.?

Babbage was subsequently charged and plead guilty to breaching Western Australia’s COVID?19 travel laws and fraud arising from the falsification of documents. He was sentenced to 10?months in prison, but served only three months after the balance was suspended. He also plead guilty to dishonesty related offences in the Northern Territory, for which he was sentenced to a six month suspended jail term.

What did ASIC have to say?

Babbage’s conduct and convictions came to ASIC’s attention, who concluded he lacked the honesty and integrity to participate in the financial services and credit industries. ASIC banned Babbage for a period of 10?years from:

• providing financial services
• engaging in credit activity
• controlling an entity that engages in credit activities or carries on a financial services business, and
• performing any function related to the provision of credit or financial services.

Babbage was also automatically disqualified from managing corporations for a period of five years by virtue of his fraud conviction.

Message for the financial services industry

ASIC’s actions send a clear message to the industry it will consider conduct in both the professional and personal spheres when determining whether a banning order is warranted. Given the ‘fit and proper test’ is a central tenet of the financial services industry, it seems likely conduct of this sort may pose difficulties with persons re?entering the industry after the expiration of a banning order or obtaining an AFSL in the future.