ASIC's Peter Kell outlines code of conduct requirements
Compliant industry codes of conduct deemed to obviate the need to comply with opt-in requirements will have to meet a hefty set of criteria, according to the Australian Securities and Investments Commission (ASIC) commissioner Peter Kell.
Speaking at a Financial Services Council (FSC) and Association of Financial Advisers (AFA) post-FOFA breakfast this morning, Kell said he expected multiple codes to be submitted and it was not ASIC's place to take a view on who should be able to submit a code, although he expected submitters to be representative bodies of the financial advice industry.
Codes will need to comply with the Corporations Act, will need to be reviewed regularly, and provide guidelines to members over and above what is contained in the legislation.
They need to be free-standing documents written in plain English and need to be enforceable on members, Kell said.
They will need to be independently administered with ongoing review, and member compliance with the codes to be monitored and enforced with appropriate sanctions, he said.
"We expect the code to address issues not contained within the legislation, and clearly explain to members what needs to be done to comply with legislation," he said. "In other words - they must be taken seriously," he said.
Kell expected the codes would take time to develop and ASIC would take weeks or months to assess each one.
Responding to a question from the audience, Kell said it was unlikely that industry codes of conduct would be required to incorporate a ban on asset-based fees on non-geared investments.
ASIC does not wish to see codes put forward without adequate input from stakeholders.Codes should address other aspects of FOFA besides opt-in, he added.
To obviate the need for opt-in codes should require an obligation to clients that will achieve the same results as opt-in, including that clients are not paying for advice they do not receive, he said.
Recommended for you
Former Iress chief executive, Andrew Walsh, has been promoted to chair of a boutique Sydney advisory firm, having stepped down from the same position at Mason Stevens.
Results are out for the latest sitting of the ASIC financial advice exam, with the pass rate falling for the second consecutive sitting.
Adviser losses for the end of June have come in 143 per cent higher than the same period last year, and bring the total June loss to over 350.
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
