ASIC reveals approach to, expectations for adviser code of ethics

The Australian Securities and Investments Commission (ASIC) has announced that it will not monitor or enforce individual advisers’ compliance with the Financial Planners and Advisers Code of Ethics 2019; and has outlined the steps that must be taken to ensure compliance with the code.

ASIC said that under the Corporations Act 2001, it does not have the role to act as a code-monitoring body. The law also specifically prevented the corporate regulator from exercising its power to ban an adviser for breaches of the code.

The announcement comes after ASIC clarified that Australian financial services (AFS) licensees who were not able to register with an ASIC-approved compliance scheme by January 01, as originally required, will not be in breach of the law. The action also follows the government announcement that it would accelerate the establishment of a single disciplinary body for financial advisers and the withdrawal of applications for ASIC approval of a compliance scheme.

Read more: ASIC to grant three-year relief from financial adviser scheme obligations

“Financial advisers will still be required to comply with the code from January 01, 2020, and AFS licensees will still be required to take reasonable steps to ensure that their financial advisers comply with the code,” ASIC said. “However, after consultation with FASEA [Financial Adviser Standards and Ethics Authority], ASIC will take a facilitative approach to compliance with standards three and seven of the code until the new single disciplinary body is operational.”

ASIC said AFS licensees would need to take the following “reasonable steps” to ensure their financial advisers comply with the code:

• Ensure their advisers are aware that they need to comply with the code from January 01 onwards;
• Provide training and/or guidance to their advisers on the types of conduct that is consistent/inconsistent with the code;
• Facilitate individual advisers’ ability to raise concerns with the AFS licensee about how the licensee’s systems and controls may be hindering their ability to comply with the code, and act on those concerns where appropriate;
• Consider whether advisers are complying with the code as part of their regular, ongoing monitoring of adviser conduct; and
• When it is in place, consider the decisions of the new disciplinary body and make any necessary changes to their systems and processes.

ASIC said it will continue to take action where there are breaches of the law by financial advisers or their AFS licensees.