ASIC not to monitor or enforce adviser code of ethics

The corporate watchdog will not be monitoring or enforcing individual advisers’ compliance with the Financial Planners and Advisers Code of Ethics 2019, it has announced.

The Australian Securities and Investments Commission (ASIC) said that under the Corporations Act 2001, ASIC did not have a role as a code monitoring body and is specifically prevented from exercising its power to ban an adviser for breaches of the code.

ASIC said this announcement followed a 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.

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“Financial advisers will still be required to comply with the code from 1 January 2020 and AFS [Australian Financial Services] 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 it expected AFS licensees to take to ensure that their financial advisers comply with the code include the following systems and processes:

  • Making sure that their advisers are aware that they need to comply with the code from 1 January 2020 onwards;
  • Providing training and/or guidance to their advisers on the types of conduct that is consistent/inconsistent with the code;
  • Facilitating 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 acting on those concerns where appropriate;
  • Considering whether advisers are complying with the code as part of their regular, ongoing monitoring of adviser conduct; and
  • When it is in place, considering the decisions of the new disciplinary body and making any necessary changes to their systems and processes.



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Not only is the Code itself unworkable, this approach to Code compliance is also unworkable. The starting date for the FASEA Code should be put on hold until the new disciplinary body starts.

That would also give the government time to clean out the biased and conflicted elements of the FASEA Board, and reimplement the Code and education standards in a way that is consistent with the original legislative intent, and does not disadvantage consumers.

This is very bad news. It basically confirms ASIC expect Licensees to ensure their advisers are meeting to Code, which will include turning off all asset-based fees and life insurance commissions for self-employed advisers in less than 5 weeks. It will cause enormous damage to small business and the ultimate casualties will be consumers. This is a disaster. The minister needs to step in immediately.

ASIC will take a " facilitative " approach to Standard 3 ?
It is very widely suspected that ASIC had direct involvement with FASEA in relation to submissions and interaction regarding then revised wording of Standard 3.
Standard 3 in it's current form is unworkable and manifestly discriminatory toward any adviser who receives asset based fees or provides advice for new and retained risk insurance business.
Standard 3 is nothing more than a facility by which to force advisers to alter remuneration models when the current models are legally and legislatively acceptable.
Standard 3 is deliberately set as a trap to re-write the current law and to automatically place advisers in the gun for a breach of the COE.
It is unfair, unworkable and discriminatory.
It is not about ethics but about forced change without first changing the law.

ASIC biased the code and is now chucking everyone under the bus

Jesus A F#cking Christ you aussies are slow! I'll say this really slowly okay...just for you...there are known knowns, these are things we know we know. We also know there are known unknowns, that is to say that we know there are some things we do not know, but there are also unknown unknowns. The one's we don't know we don't know.

You know dumbos there's a code and you know you need to comply with it from 2020 okay, you know there's no-one to monitor or enforce the code but it's unknown when someione will. And you don't know yet but once you think you're educated, ethical and compliant we're gonna set up another new body and call it the "Commission of Conflicts of Interests for Financial Advisers" where we'll appoint only the highest calibre of expertise in the land on Conflicts of Interest...the FASEA Board of Directors :-O

So, the Code comes in and we have to abide by it (and all its unworkable aspects) and this announcement just allows FASEA to go on their Christmas holidays without fixing it all before they go.

I don't think FASEA will ever fix the Code. There are too many hardline zealots on the FASEA Board who are happy with it just the way it is, in spite of the enormous damage it will ultimately do to consumers.

Therefore the government needs to fix FASEA.

too true Anon!

A reply I received from a politician yesterday, which confirms that all the 'guidance' in the world doesn't mean anything if the code itself says something:
"With regards to your concerns of conflicting provisions in the Guidance on the Code and Code of Ethics Standard, as I am sure you are aware, formal obligations for licensed financial advisers lie in the Code of Ethics Standard rather than the Guidance on the Code."
God help us all!

Ok so how on earth is this going to work at all in regard to existing insurance clients whereby the adviser receives an ongoing renewal commission.??
A practice has 300K, 400K ,500K of recurring risk insurance income.
Clients range from current to 30 years involvement with practice.
Naturally, the recurring income is based on a percentage of the premium. (ie variable).
Is the expectation for this practice to have to convert every single risk insurance client to a flat dollar fee and send an invoice ?
The removal of the renewal commission from the product will only potentially decrease the premium by a minimal amount, not the amount that would equate to the actual commission paid.
If you don't do this and instead receive the commission and then rebate the commission amount to the client and then provide an invoice to the client for the equivalent amount, the adviser is still receiving variable commission and therefore is in breach of Standard 3 by providing any advice to a client they have been dealing with for 15 years !!
This whole process is unworkable.

It's pretty unworkable. How exactly are PI insurers and licensees supposed to work with this guidance when it's pretty clear that anyone could just change their mind and go back hunting through the past to create breaches.
But its the reality and no one cares. No one cares when taxi drivers had their licensed devalued to nothing and no one will care about self employed advisers losing their houses because licensees retain revenue and are a law unto themselves.
Advisers have no rights, no representation and no hope unless they are an employee of a business with a management and licesning structure seperate from the adviser.
Part of me thinks this is all actually the right move when it comes to transparency and professionalism but it's being done in the most destructive way possible. Far better to create the new world of advice through new regulation, keep the old one at the same time and let the consumer choose. Similar to the USA where you have a fiduciary and a sales person.

It's somewhat comforting to know that we actually have a 'no action' position position from the regulator to work with for, say, the next 12 months. However, the standards are law and advisers need to alter their processes to comply. From a licensee perspective, we need the industry to rally around what interpretation and implementation of the Code should look like so we don't inadvertently undershoot or overshoot the mark.

Read the press release on the ASIC website. There is not a 'No Action' position. It is the complete opposite ..... 'AFS licensees will still be required to take reasonable steps to ensure that their financial advisers comply with the code from 1 January 2020, and advisers will still be obliged to comply with the code from that date onwards. ASIC may take enforcement action where it receives breach reports'

As I have said before, "Welcome to the impending Australian Civil War".

I fully expect and anticipate violent incidents to start and increase, whether it be attacks on politicians and/or bureaucrats and/or electoral and other bureaucrats offices. We are reverting to "Law of the Jungle", and the basic precepts of society are disintegrating.

* At some point, the suicides [16 so far, I understand] will stop, and the rebellion and physical attacks will start. "Why should I kill myself due to someone else's stupidity? Why should I lose? ? They should be the ones to suffer!".

* At some point, people will say "No more - I am not going to have DECADES OF MY WORK, effort, study, client relationship buildings and client benefits eradicated; my blood, sweat, and tears ignored; MY FAMILY, MY LIFE, MY FUTURE DESTROYED, and LEGITIMATELY WORKED for INCOME CONFISCATED AND STOLEN".

* At some point, the only solution will be [at best] civil disobedience; at worst, violent revolution. Has everyone forgotten the 1970’s? Not so long ago...

I wonder what sanctimonious pieties they will bleat when the first random politician or bureaucrat lies bleeding in the street; or when an ex Adviser has lost everything; who can't pay his bills and/or feed their family rams a car into an Electoral Office, or starts throwing Molotov Cocktails...

"When politicians feel the heat, they see the light". "Electoral Violence", physical or not, is the only remedy to resolve this incredible mushrooming idiocy.

IMO, Australian politicians are literally some of the STUPIDEST, most ignorant, and most incapable of systemic thought and "Connecting the dots" of easily foreseen consequences cascading from thoughtless, ignorant, and corrupt legislation in the Western world. As has been said:"A 1st rate country run by 3rd rate people" - and I say that with no particular joy or enthusiasm.

Unfortunately, our "leaders" largely come from the furthest fringes of the Bell Curve, not the mainstream, as in the past - ideologically driven, "Holier than thou' Utopian activists; or, at the other extreme, brutal, low brow, power, money, and control hungry, "Schoolyard Bully", "Type A" personalities, willing to rape and pillage for their short term benefit.

Legislation and Regulation is imposed on the 98% in order to solve a problem of the 2%...

How many times have we heard: "Oh, we at XYZ Insurance [ASIC/FARCEA/TPB/AFSL/APRA etc] would never enforce that - it's just there in the Policy Contract [in the current Code/Law] to cover ourselves...". yet suddenly, some mid level executive or smart lawyer enforces and quotes the ignored rule?

In future, will there suddenly be "Grandfathered Retrospective Idiotic Enforcement for FARCEA" [GRIEF]? How rampant and pervasive will Bureaucratic Totalitarianism ultimately become?

1. How can grandfathered commissions [as a small example] be stopped in 1/2021 [assuming that the unConstitutional law not be overturned], yet the FARCEA rules mandate that they not be accepted from 1/2020?

Does no one read and/or coordinate proposed policies with existent legislation? Does no one understand, or think of consequences? Is it that complicated?

^ Does the "View from 10,000 metres" never land to deal with reality, human beings, and consequences?

* Is everything ideological and theoretical, happily lapped up by taxpayer funded "Jobs for the boys" and "Reach around" corrupt side deal benefits? Is it "Let them eat cake"?

* Where is Dr Guillotine and/or Guy Fawkes when you need them?

2. Will FARCEA forgive the debts created, pay the rent, utilities, salaries, leases, school fees, food, and other overheads of Advisers when income is stopped at the Manager [they will use every opportunity to confiscate the trail, on the basis of "It will take YEARS OF LITIGATION and MILLIONS OF DOLLARS TO UNWIND, so let's see what we can get away with"], or, at AFSL level, on the basis that "We need to protect ourselves and "comply" with the current law, Advisers be damned" [how convenient!]?

3. I saw yesterday that "Stop/Go" "Lollipop People" unskilled, uneducated road workers working on Qld Government contracts will be mandated to earn $180,000+ under "Best Practice" policies, even if the market doesn't require it. Carpenters, etc will earn $210,000 - $230,000.

What in God's name is happening to create parasitical, corrupt, incompetent Governments AT ALL LEVELS?

I reiterate: Welcome to the impending and ongoing Australian Civil War – it is only a question of how violent it is going to become.

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