The Federal Government has aborted plans to establish Financial Adviser Standards and Ethics Authority (FASEA) code-monitoring bodies, opting instead to move towards a single disciplinary body covering advisers.
The Treasurer, Josh Frydenberg, announced the move late on Friday effectively aborting moves by a consortium of financial planning groups to fund and establish a code-monitoring body.
Announcing the move, Frydenberg said the Government would work towards establishing the new body in early 2021, subject to the passage of legislation which would be introduced into the Parliament next year.
"A long term sustainable solution based on Commissioner Hayne’s recommendations will replace the role of code monitoring bodies which were due to be established by industry associations under professional standards reforms," he said.
"A Code of Ethics will be applied by law from 1 January 2020, and financial advisers will be expected to meet the code’s high ethical standards. Australian Financial Services Licensees will also be required to take reasonable steps to ensure their representatives comply with the code. The Australian Securities and Investments Commission (ASIC) will be able to take action against licensees that fail to do so."
Frydenberg said ASIC was considering the steps it needed to take to ensure that licensees did not breach the law by not registering advisers with a code monitoring body and would provide an update shortly.
"The Government thanks the professional associations and acknowledges the considerable amount of time and resources that have been undertaken towards implementing code monitoring by the end of this year. Treasury will immediately begin engaging with these associations, consumer representatives and other stakeholders to consult on the new system. Roundtables will be held later this year to consider policy design and how to best transition to the new system," he said.
Comments
What is going on in this industry? The Government has no idea. ASIC have no idea. The general public have no idea. Practising advisers are confused, sick and tired of the constant goal post changes and the effects on us both personally and professionally. How can an exam be structured (largely on ethics and the FASEA code) and be fair to all candidates when the rules are not constant and a press release could change an answer from right to wrong in a Treasurer's tweet. This has become a joke!!!
This is a sensible decision by the govt to remove one of the many duplicate layers of regulation that are making it too hard for consumers to access affordable professional advice. Another unnecessary layer that needs to be scrapped immediately is TPB authority over financial advisers. The tax advice given by financial advisers is now strongly regulated by other means. TPB should be purely focused on tax agents.
While this is a welcome development overall, it exacerbates a big short term problem. Until the new disciplinary body is in place, it seems that ASIC will be enforcing the FASEA Code. Standard 3 of that Code is ambiguous and unworkable.
The govt needs to get Standard 3 fixed before 1 Jan 2020. FASEA's lame explanations that "Standard 3 doesn't necessarily mean what it literally says" are pointless if it is being enforced by ASIC. ASIC has a track record for interpreting legislation to suit its own bias. They cannot be given open slather on the seriously flawed Standard 3.
Exams on the FASEA standards have already started. How can they be changed now? Someone that previously failed subsequently passes due to a change in what ethical means?
Can anyone work in 3 months time???? I understood you can't provide advice without membership of a code monitoring body.... What now?
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