The Australian Securities and Investments Commission has followed up its announcement that it will grant relief from the requirement for financial advisers to comply with the financial adviser code of ethics, giving details of the steps AFS licensees must take to comply with the code.
Earlier this month, ASIC said it had taken action to give AFS licensees certainty that they will not be in breach of the law if their advisers are not registered with an ASIC-approved compliance scheme by 1 January next year, as originally required.
ASIC has granted a three-year exemption for all AFS licensees. It will not be monitoring or enforcing individual adviser’s compliance with the Financial Planners and Advisers Code of Ethics, which was developed by the Financial Adviser Standards and Ethics Authority and introduced in February.
The Financial Planning Association welcomed ASIC’s latest statement. FPA chief executive Dante De Gori says: “Today’s announcement acknowledges these standards require significant change and we support a facilitative compliance approach.”
Under the Code, a new single disciplinary body will displace the role of compliance schemes in monitoring and enforcing the code.
In its latest statement, ASIC says advisers will still be required to comply with the Code from 1 January 2020 and AFS licensees will still be required to take reasonable steps to ensure that their advisers comply with the Code.
However, it will take a facilitative approach to compliance until the new disciplinary body is operational.
Under this approach, ASIC expects licensees to take the following steps to ensure their advisers comply with the code:
- Make sure their advisers are aware that they need to comply with the code from 1 January onwards;
- Provide training and/or guidance to their advisers on the types of conduct that is consistent with the Code;
- Facilitate advisers’ ability to raise concerns with the licensee about how the licensee’s systems and controls may be hindering their ability to comply with the code, and act on these concerns where appropriate;
- Consider whether advisers are complying with the code as part of their regular monitoring of adviser conduct; and
- Consider the decisions of the new disciplinary body, when it is in place, and make any necessary changes to their systems and processes.
ASIC says it will continue to take action where there are breaches of the law by financial advisers or their AFS licensees.
