The Federal Opposition and other minor parties are pressing hard for an extension of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry amid clear signs the Government may have to amend recent legislation to satisfy concerns raised in the commission’s interim report.
The shadow minister for Financial Services, Clare O’Neil called for an extension of the Royal Commission on the basis of the issues raised in the interim report, while the Prime Minister, Scott Morrison and the Treasurer, Josh Frydenberg did not rule out extending the process if it was requested by the Commissioner, Kenneth Hayne.
However, the initial findings of the Royal Commission have already pointed to the possibility of shortcomings in some of the arrangements underpinning the Financial Adviser Standards and Ethics Authority (FASEA) and the relative roles of the Australian Securities and Investments Commission and any future code-monitoring bodies.
In circumstances where the FASEA code-monitoring arrangements might place substantial disciplinary responsibility on bodies such as the Financial Planning Association (FPA), the interim report has warned that “the investigation and punishment of breaches of law should not be outsourced to private bodies”.
“Licensees and industry bodies should not try to resolve breaches of law by advisers internally, but must notify ASIC or other appropriate authorities. A breach of the code of ethics must not be allowed to obscure, or be treated as more significant than, a breach of the law,” the interim findings said.
Hayne specifically outlined the differences between codes of ethics and laws and stated that “it is laws, not codes of ethics, that are the proper repositories of basic norms of conduct”.
The Royal Commission’s interim findings have also created a challenge for platform providers, particularly with respect to vertically-integrated customers associated with advice licensees and also stating that “platform operators continue to receive remuneration that, but for ‘grandfathering’, would be conflicted remuneration”.