The federal government’s decision to set up its own single disciplinary body instead of using code of ethics monitoring bodies linked to professional associations will not diminish the latter’s role in setting standards, according to some of the representative bodies.
Professional associations representing financial planners and advisers were originally included in plans by the government to oversee the enforcement of the Financial Adviser Standards and Ethics Authority (FASEA) code of ethics via the formation of code monitoring bodies, with six groups forming a joint body to oversee their members.
These plans were put on hold when the government last week announced it would form its own disciplinary body to oversee the FASEA code and industry associations would no longer be included in its plans.
SMSF Association chief executive John Maroney said this change, despite coming only weeks before the monitoring scheme was set to commence, would not change the current oversight role of associations.
“There is still going to be a FASEA code of ethics and we will still need to consider how they will apply to our members. While we will not be involved in code monitoring, we are still required to oversee members who have specialist designations,” Maroney said.
FPA chief executive Dante De Gori said the government handling of professional standards and education via FASEA and its oversight of the sector did not impact on the role of associations in lifting standards or enforcing those which applied to their members.
Rather, De Gori said the government’s move shifted the focus to what it would create in place of the code monitoring scheme.
“The Code Monitoring Authority set up by the associations was 18 months in the making, so the question is what will the government build instead in the next 14 months and will it go in a detrimental direction for planners?” he said.
Association of Financial Advisers policy and professionalism general manager Phil Anderson said the introduction of a code monitoring body would have increased costs to members of associations, who would now not have to carry that cost, and nor would they have to scramble to be registered with a code monitoring body.
“What had to be done before 15 November to get advisers registered with a code monitoring body would have been a huge workload for the sector and that substantial work has been taken off the table,” Anderson said.
Following the government’s announcement of its change of plans, the Australian Securities and Investments Commission (ASIC) will make a legislative instrument to provide relief to Australian financial services licensees from having to meet financial adviser compliance scheme obligations.
ASIC will grant a three-year exemption to all licensees from obligations in the Corporations Act 2001 to ensure their advisers are covered by a compliance scheme.
Licensees will still be required to ensure their financial advisers comply with the FASEA code of ethics from 1 January 2020 and advisers will still be obliged to comply with the code from that date onwards.