Compliance, FASEA

ASIC grants compliance scheme exemption

ASIC exemption compliance scheme

ASIC has granted an exemption for licensees who do not sign onto a compliance scheme following the government's decision to keep ethics enforcement inhouse.

Financial advisers will not be penalised for not being registered with an approved compliance scheme until the end of October 2022 following the federal government’s recent decision to create a new body to enforce the incoming industry-wide code of ethics.

The Australian Securities and Investments Commission (ASIC) today announced it had granted a three-year exemption to all Australian financial services licensees (AFSL) that they would not be in breach of requirements to be registered with an ASIC-approved compliance scheme by 1 January 2020.

AFSLs were originally required to have registered with a scheme by that date under changes to professional and education standards that will result in the Financial Adviser Standards and Ethics Authority (FASEA) code of ethics taking effect.

The ASIC exemption follows the recent announcement that the government would establish its own industry-wide disciplinary body to monitor and enforce the code and that it would no longer be calling on industry associations to be involved in that work.

The new government body is scheduled to begin its work by early 2021, well after the time frame advisers and AFSLs are due to fall under the code, prompting ASIC to make the exemption.

This announcement led to the withdrawal of an application for ASIC approval of a compliance scheme that had been put forward by a group of advice-related professions, as well as the compliance scheme regime being unable to proceed at this time.

In doing so, ASIC stated it had taken action to provide certainty to AFSLs that they would not be in breach of the law because of the changes, with the exemption instrument stating the three-year period will expire on 31 October 2022.

It said despite the exemption, AFSLs “will still be required to take reasonable steps to ensure that their financial advisers comply with the code from 1 January 2020, and advisers will still be obliged to comply with the code from that date onwards”, and enforcement action would be taken where breaches occurred.

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