Stronger powers proposed for the Australian Securities and Investments Commission (ASIC) should not be introduced unless accompanied by checks and balances, the Insurance Council of Australia (ICA) has warned.

“We are concerned that the proposed directions powers will be the catalyst for a diminution in due process and procedural fairness, both of which are essential components of a fair, transparent and judicious regulatory regime,” ICA CEO Rob Whelan says in a letter to the Enforcement Review Taskforce.

Changes outlined in a taskforce positions paper would allow ASIC to respond to compliance failures more quickly by issuing directions notices, and could also see the regulator taking action when a licensee is proposing to engage in misconduct.

ICA says the taskforce should take into account new product intervention powers that are also being finalised. If moving ahead beforehand, new measures should be tightly defined and used for serious contraventions, not minor or technical issues.

ASIC should conduct a proper investigation, inform licensees with preliminary notices of alleged breaches and give them a chance to respond, the submission says.

Under ICA’s proposed process, ASIC would then provide a 28-day notice of intention to issue a direction, giving the licensee the chance to seek an injunction or dismissal in the Administrative Appeals Tribunal (AAT).

“The ability of a licensee to challenge an ASIC decision to issue a notice prior to the notice being issued is critical,” ICA says.

“Reputational harm to the licensee would be difficult to avoid once an ASIC direction has been issued, even if subsequently overturned by a court or (AAT).”

It says enhanced ASIC directions powers should apply only to “actual” contraventions, rather than proposed misconduct that has not yet happened.