The Australian Securities and Investments Commission (ASIC) is consulting on code of ethics compliance schemes for financial advisers under the new education requirement legislative regime.
The corporate regulator has released a consultation paper (CP) outlining its approach to approving and overseeing compliance schemes for advisers in the wake of incoming training and education requirements for financial advisers.
These requirements include obligations to comply with a code of ethics that is being developed by the Financial Adviser Standards and Ethics Authority. Under this new legislative regime, compliance with this code of ethics will be enforced by ASIC-approved compliance schemes.
From 1 January 2020, all financial advisers who provide personal advice to retail clients on more complex financial products must be covered by an ASIC-approved compliance scheme under which their compliance with a new single, uniform code of ethics will be monitored and enforced.
These compliance schemes will be operated by monitoring bodies.
ASIC deputy chair Peter Kell said: “Monitoring and enforcing compliance with the code of ethics is a significant responsibility that will be resource intensive for the bodies that take on this role.
“The compliance scheme framework is key to the successful operation of the proposed code of ethics, which must have the greatest possible influence on the behaviour of financial advisers.”
The proposals in CP 300 “Approval and oversight of compliance schemes for financial advisers” include the process for applying for approval of a compliance scheme; ASIC’s expectations on the governance and administration, monitoring and enforcement processes, and ongoing operation of compliance schemes; and how ASIC plans to exercise its powers to revoke the approval of a compliance scheme and to impose or change conditions on the approval.
It also includes ASIC’s proposal to modify the law to ensure monitoring bodies can gather information from Australian financial services licensees and authorised representatives they require to conduct proactive monitoring activities.
ASIC is consulting for six weeks and is inviting responses by 28 June. It intends to release a regulatory guide setting out its final policy by the end of September.
