ASIC has released guidance on its proposed approach to approving and overseeing compliance schemes for financial advisers (RG 269).
The financial advice professional standards reforms include obligations for financial advisers to, from 1 January 2020, comply with a code of ethics and be covered by an ASIC-approved compliance scheme under which their compliance with the code of ethics will be monitored and enforced.
RG 269 explains the ASIC process and criteria for determining whether to grant approval to a compliance scheme. It also sets out:
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- ASIC’s expectations for the governance and administration, monitoring and enforcement processes, and ongoing operation of compliance schemes
- how ASIC will exercise its powers to revoke the approval of a compliance scheme and to impose or vary conditions on the approval, and
- the notifications that monitoring bodies must make to ASIC.
ASIC Deputy Chair Peter Kell said that ASIC is committed to ensuring robust, transparent, fair and consistent compliance schemes that effectively monitor and enforce compliance with the code of ethics.
‘Effective compliance schemes are a key component of the reforms that will require higher standards of ethical behaviour and professionalism among financial advisers.’
‘Our guidance requires high standards for compliance schemes, reflecting the significant responsibility that monitoring bodies operating compliance schemes will have. This includes the responsibility to effectively monitor and sanction adviser members if required,’ he said.
The code of ethics is being developed by the Financial Adviser Standards and Ethics Authority (FASEA). Consultation on an exposure draft of the code of ethics released by FASEA closed on 1 June 2018. At this time, FASEA has not released the final code. If there are significant changes from the draft code, ASIC might need to revise its guidance when the final code is released.
Further information
- Regulatory Guide 269 Approval and oversight of compliance schemes for financial advisers (RG 269)
- Report 595 Response to submissions on CP 300 Approval and oversight of compliance schemes for financial advisers (REP 595)
- Consultation Paper 300 Approval and oversight of compliance schemes for financial advisers (CP 300) and submissions
Recap
- The Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 amended the Corporations Act 2001, and commenced on 15 March 2017. It introduced a number of new requirements for financial advisers who provide personal advice to retail clients on more complex financial products.
- From 1 January 2020, all financial advisers 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.
- In May 2018, ASIC released Consultation Paper 300 Approval and oversight of compliance schemes for financial advisers (CP 300) which sought feedback on a number of proposals in relation to the approval and oversight of compliance schemes for financial advisers.
- The consultation period for CP 300 closed in June 2018 and we received 11 submissions.
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