ASIC, FASEA, Financial Planning

Individual adviser oversight still unclear

advisers oversight

ASIC is still unsure whether it will have oversight over individual advisers from 2022, stating its authority only covered licensees under current legislation.

ASIC remains uncertain as to its role in policing the compliance of individual advisers after the deadline for meeting new education and professional standards expires at the end of 2021.

Appearing before the House of Representatives Standing Committee on Economics earlier this week, the corporate regulator was asked what role it would have in ensuring advisers who had not passed the mandatory advisers’ exam, conducted by the Financial Adviser Standards and Ethics Authority (FASEA), did not provide advice after 31 December 2021.

ASIC commissioner Danielle Press said while FASEA was responsible for setting the standards for advisers, ASIC only had regulatory oversight over the financial advice licensees.

“Within the legislation that FASEA operates under, ASIC is directly carved out from making decisions on individual planners with reference to the code of ethics,” Press said in response to a question from committee member Liberal MP Craig Kelly.

She added any breaches of the requirement to have passed the exam would only be addressed by ASIC at a licensee level, but prosecutions of individual advisers was not something it was currently tasked with addressing.

“We would be involved with a licensee allowing planners to act and would take that work on. In regards to the individual planner it would be FASEA setting the standards and the single disciplinary body that would come into play and have responsibility for the code,” she said.

The formation of a single disciplinary body was announced by the government in October 2019, with the body to be separate from any code monitoring conducted by professional associations and with its own vehicle to discipline financial advisers and planners.

When asked what role ASIC would have in regards to the single disciplinary body, Press said the task of the body, including its oversight of advisers, was still under consideration by government as to what bodies would have input or involvement.

“The single disciplinary body, that’s not finalised yet, but that could have ASIC involvement, or part ASIC, part FASEA, or all one or the other?” Kelly said.

Press said: “The decision where the single disciplinary body lies is one for the government and that has not been decided yet.”

In late 2019, ASIC clarified its role in regards to the FASEA Code of Ethics, stating it had no oversight over the code after it made an exemption for advice licensees to be registered with an ASIC-approved compliance scheme by 1 January 2020, as a result of the government’s plan to set-up its own disciplinary body.

At the time, ASIC stated it would, however, take a facilitative approach with advisers to meeting standards three and seven of the FASEA code, which relate to conflicts of interest and the need for clients to give consent for an adviser to receive benefits related to advice.

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