Codes to achieve same outcomes as opt-in
Professional codes of conduct that meet approval in terms of obviating the need for financial advisers to comply with opt-in will need to achieve the same outcomes as opt-in, the regulator has confirmed.
"Codes can't be devised overnight or entered into lightly, either by industry associations or individual code members. Our code approval processes will be careful and rigorous," Australian Securities and Investments Commission (ASIC) senior manager Nick Coates said at the Association of Financial Advisers roadshow yesterday.
ASIC expected codes would take months rather than weeks to develop, and applicants would need to submit information about how the code was devised, how it will be enforced, and any other matters outlined in the guidance, he said.
ASIC would soon be releasing guidance on the code approval process and would be consulting on the matter, and in the meantime he encouraged stakeholders to look at the existing regulatory guidance (RG 183) relating to professional code approval.
"As for obviating the need, I'm sure it will not come as a surprise to hear that at this stage our view is that obviating the need via opt-in does not mean that advisers will suddenly have no responsibilities in this area," Coates said.
"We expect codes to contain provisions that will achieve substantially the same outcomes as the opt-in requirements intend to achieve. That is: engage retail clients who receive valued services for the ongoing fees that they pay," he said.
Coates also flagged a "bad apples" project that would target the practice of less reputable advisers jumping from licensee to licensee and benefitting from a lack of reference checking within the industry.
ASIC would also be starting the second phase of its business surveillance project on second tier licensees. He said ASIC would expect different results and different types of risk management frameworks due to the different size of licensees in the sample. Coates also said the survey would be less rigorous and take less time to complete than the original survey.
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