AFA, FPA welcome ASIC hands-off code monitoring approach
The Association of Financial Advisers (AFA) has welcomed the corporate watchdog’s approach to the Financial Planners and Advisers Code of Ethics 2019 as it gives the standards body an opportunity to engage in genuine consultation for the code.
The Australian Securities and Investments Commission (ASIC), today said it would not be monitoring or enforcing individual adviser compliance with the code.
AFA chief executive, Philip Kewin, said: "FASEA [the Financial Adviser Standards and Ethics Authority] now has an opportunity to engage in genuine consultation to ensure the Code sets the appropriate standards while at the same time being realistic.
"The AFA will continue to work with other professional associations and stakeholders including the Government, regulators and FASEA, to arrive at sensible outcomes that deliver trust and ethical standards that meet and exceed community standards.”
Kewin said the AFA still had a number of concerns and particular the practical workability of Standard three around conflicts and the guidance around standard seven, benefit payments and fees but noted after consultation with FASEA, ASIC would take a facilitative approach to compliance until the new single disciplinary body was operational.
“We will continue to advocate for changes to Standard three and further guidance across the board, in particular with respect to Standard seven and scaled advice,” Kewin said.
The Financial Planning Association (FPA) also welcomed the approach and in particular the ASIC guidance to licensees on their expectations of how licensees must support financial planners' compliance with the code of ethics, including facilitative compliance in relation to Standards three and seven of the code
FPA chief executive, Dante De Gori, said: “The FPA’s advocacy work has raised concerns in relation Standards 3 and 7 and the short time frames with which to comply. We welcome today’s announcement from ASIC which acknowledges these Standards require significant change, and we support a facilitative compliance approach to this.
“We have expressed our concerns that these two Standards – which relate broadly to conflicts of interest (including fee and business models), remuneration models, referral arrangements, and gaining client consent from existing clients – need more clarification.
“It is important to note that facilitative compliance means ASIC will adopt a measured approach where inadvertent breaches arise or systems changes are underway, provided industry participants are making reasonable efforts to comply.”
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