The Australian Securities and Investments Commission (ASIC) has gained stronger powers to take action against financial service providers it believes are likely to breach the law.

The major changes from amendments to the Corporations Act relate to ASIC’s power to suspend or cancel an Australian financial services licence or to make an order banning a person from providing a financial service on the basis of anticipated conduct.

Commissioner John Price says this “will provide greater certainty about our ability to take administrative action against financial services providers who are likely to breach the law”.

“These changes are intended to make it easier for ASIC to remove unscrupulous operators from the industry, improve overall industry standards and promote broader consumer and investor confidence in financial services,” he said.

The changes – part of the Future of Financial Advice (FOFA) reforms – are outlined in a revised version of ASIC Regulatory Guide 98 relating to administrative action against financial services providers.

The guide sets out key factors ASIC considers in deciding to take administrative action.

It explains factors and examples of conduct relating to specific periods of banning and has been updated to place strong emphasis on underlying conduct, in particular conduct involving dishonesty rather than the amount of loss or absence of prior contraventions.

Mr Price told the Parliamentary Joint Committee on Corporations and Financial Services that the reforms make an important change by testing whether someone applying for a licence is likely to breach their obligations in the future, rather than whether they simply will breach their obligations.

“In 13 years of being a regulator I have yet to see someone send an email saying, ‘I will breach my obligations in the future’,” Mr Price said.