ASIC compliance oversight – announced

Alex Burke,  Senior Writer,  No More Practice Education

Ending the week with a bang, ASIC has released its proposed approach for overseeing code of ethics compliance schemes for financial advisers, also known as RG269.

The has explained that from 1 January 2020, any adviser will be required to comply with a code of ethics and be covered by a scheme “under which their compliance with the code will be monitored and enforced.”

The guide itself is quite extensive – you can read it here – but let’s cover off some of the key points for advisers and licensees.

Obligations for licensees

ASIC explained that licensees will need to ensure all authorised representatives must be covered by an ASIC-approved compliance scheme. For advisers who join a licensee before 15 November 2019, the licensee will have until 1 January 2020 to ensure they’re covered.

Further, licensees will have 30 business days from the date of authorisation to ensure any adviser is covered by a compliance scheme.

What ASIC considers an approved compliance scheme

ASIC said it will approve a compliance scheme under several conditions. First, the regulator needs to be assured that compliance with the code “will be appropriately monitored and enforced,” and that the relevant monitoring body “has sufficient resources and expertise to appropriately monitor and enforce compliance with the code.”

This will be determined through a range of factors, including the financial, technological and human resources of the monitoring body; the number of advisers covered by the scheme; consultation procedures; professes for data management and reporting; whether functions of the monitoring body are outsourced; and existing staff competency as well as training procedures.

Behaviour, transparency and consistency

The codes themselves will be considered if they represent three key principles: behavioural change, transparency and consistency.

The behavioural change component relates to the idea that a given code should make advisers “feel personally and intrinsically supported and motivated to act in an ethical manner” and “have a genuine belief that if they do not comply with the code, that behaviour may be identified and acted on by a monitoring body.”

Transparency relates to monitoring bodies and how they’re subject to external review; ASIC believes this will educate advisers and licensees on non-compliant conduct (and risks of non-compliance), and that it will keep monitoring bodies accountable and “help achieve the aim of the professional standards reforms of informing consumer trust in the financial advice industry.”

The “consistency and fairness” principle focuses on ensuring a standardised approach to compliance schemes, given that advisers and licensees may be choosing between multiple schemes. On top of that, “financial advisers, those who make complaints about them and all other stakeholders should be able to expect issues to be addressed fairly, competently and with an appropriate level of independence.”

How the approval process will work

ASIC is aiming to make the approval process consistent, such that it does not give any one compliance scheme at a competitive advantage. It comprises three stages: first, monitoring bodies will need to register an expression of interest in October.

After that, they will need to submit a draft application between November 1 and December 31; ASIC will aim to provide feedback by 31 March 2019. Finally, monitoring bodies will need to submit the final application between 1 June 2019 and 30 June 2019.

Approvals will then be announced in October 2019.


ASIC said this new oversight regime came about due to its concerns that the “professional, ethical and educational standards of financial advisers are too low,” and that these codes of conduct should have a tangible impact on raising trust in Australia’s advice industry.

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Paul Meleng

28/09/18

Put my name down for a subcontract job as a first step SOA checker. Ideal gig economy type job for a retired adviser of 30 years eperience ,still fully alert and up to date. I was reaching my peak when I sold business to have cancer treatment. The treatment worked and now Im bored and keen to engage in improving the advice scene. So many good people to interact with.

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