ASIC not to monitor or enforce adviser code of ethics
The corporate watchdog will not be monitoring or enforcing individual advisers’ compliance with the Financial Planners and Advisers Code of Ethics 2019, it has announced.
The Australian Securities and Investments Commission (ASIC) said that under the Corporations Act 2001, ASIC did not have a role as a code monitoring body and is specifically prevented from exercising its power to ban an adviser for breaches of the code.
ASIC said this announcement followed a Government announcement that it would accelerate the establishment of a single disciplinary body for financial advisers and the withdrawal of applications for ASIC approval of a compliance scheme.
“Financial advisers will still be required to comply with the code from 1 January 2020 and AFS [Australian Financial Services] licensees will still be required to take reasonable steps to ensure that their financial advisers comply with the code,” ASIC said.
“However, after consultation with FASEA [Financial Adviser Standards and Ethics Authority], ASIC will take a facilitative approach to compliance with Standards three and seven of the code until the new single disciplinary body is operational.”
ASIC said it expected AFS licensees to take to ensure that their financial advisers comply with the code include the following systems and processes:
- Making sure that their advisers are aware that they need to comply with the code from 1 January 2020 onwards;
- Providing training and/or guidance to their advisers on the types of conduct that is consistent/inconsistent with the code;
- Facilitating individual advisers’ ability to raise concerns with the AFS licensee about how the licensee’s systems and controls may be hindering their ability to comply with the code, and acting on those concerns where appropriate;
- Considering whether advisers are complying with the code as part of their regular, ongoing monitoring of adviser conduct; and
- When it is in place, considering the decisions of the new disciplinary body and making any necessary changes to their systems and processes.
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
