As announced on 14 November 2019, ob体育 has taken action to provide certainty to Australian financial services (AFS) licensees that they will not be in breach of the law because their financial advisers were not able to register with an ob体育-approved compliance scheme by 1 January 2020, as originally required.听
ob体育鈥檚 action follows a Government announcement that it would accelerate the establishment of a single disciplinary body for financial advisers and the withdrawal of applications for ob体育 approval of a compliance scheme.
ob体育 will not be monitoring or enforcing individual advisers鈥� compliance with the (the code). Under the Corporations Act 2001, ob体育 does not have a role as a code monitoring body and is specifically prevented from exercising its power to ban an adviser for breaches of the code.
The code was set by the Financial Adviser Standards and Ethics Authority (FASEA) in February 2019. In October 2019, FASEA issued guidance about the interpretation of the code. FASEA is currently consulting about the guidance. The new single disciplinary body will displace the role of compliance schemes in monitoring and enforcing the code.
Financial 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 financial advisers comply with the code. However, after consultation with FASEA, ob体育 will take a facilitative approach to compliance with Standards 3 and 7 of the code until the new single disciplinary body is operational.
The reasonable steps that ob体育 expects AFS licensees to take to ensure that their financial advisers comply with the code include the following systems and processes:
- making sure that their advisers are aware that they need to comply with the code from 1 January 2020 onwards;
- providing training and/or guidance听to their advisers on the types of conduct that is consistent/inconsistent with the code;
- facilitating individual advisers鈥櫶齛bility to raise concerns with the AFS licensee about how the licensee鈥檚 systems and controls may be hindering their ability to comply with the code, and acting on those concerns where appropriate;
- considering whether advisers are听complying with the code as part of their regular, ongoing monitoring of adviser conduct; and
- when it is in place, considering the decisions of the new disciplinary body and making any necessary听changes to their systems and processes.
In determining what constitutes reasonable steps ob体育 will take into account the context in which AFS licensees are operating. This includes the current dynamic regulatory environment, the timing of guidance provided by FASEA about the meaning of the code, and the evolving industry understanding about the meaning and implications of the code.
As noted above, AFS licensees 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. ob体育 may take enforcement action where it receives breach reports.
ob体育 will continue to take action where there are breaches of the law by financial advisers or their AFS licensees.
Background
Professional standards reforms for financial advisers were introduced to the Corporations Act 2001 in March 2017 to raise the education, training and ethical standards of people providing personal advice to retail clients on more complex financial products.
These reforms require FASEA to develop the code. See for information and guidance on the code.
For additional information see:
- ob体育 media release 19-309MR听ob体育 relief from financial adviser 听听听听 compliance scheme obligations takes effect
- ob体育 media release 19-280MR听ob体育 to provide relief from financial adviser compliance听scheme听obligations
- Joint media release from the Treasurer and the听Assistant Minister for Superannuation, Financial Services and听Financial听Technology of 11 October 2019