Despite having formed a separate corporate entity and advertised for key personnel, the consortium of financial services bodies which aimed to establish a Financial Adviser Standards and Ethics Authority (FASEA) code monitoring authority have been jointly saved millions of dollars.
One of the reasons the consortium comprised of the Financial Planning Association (FPA), the Association of Financial Advisers (AFA), the SMSF Association, The Boutique Financial Planners, The Financial Services Institute of Australasia and the Stockbrokers and Financial Advisers Association of Australia was formed was because they could not have afforded establish and run a code-monitoring body singly.
However, the Government’s decision to effectively abort an industry-backed code-monitoring body to pursue the establishment of a single disciplinary body covering financial planners represents a substantial post-Royal Commission veto of industry self-regulation.
The consortium had for months been seeking clarity from the Treasurer, Josh Frydenberg, on the Government’s intentions with respect to the Code Monitoring Authority because of its parallel commitment to the establishment of a Single Disciplinary Body for financial planners as recommended by the Royal Commissioner, Kenneth Hayne.
That clarity was finally delivered on Friday with the result that the consortium withdrew their application to form the code-monitoring body declaring that the announcement “makes it unreasonable for us to proceed”.
Both AFA chief executive, Phil Kewin, and FPA chief executive, Dante De Gori, expressed disappointment at the need to withdraw from the process given the amount of effort which had been put in.
The consortium had lodged an application for approval to form a code monitoring authority with the Australian Securities and Investments Commission (ASIC) last month and if status had been granted financial advisers, irrespective of membership of the sponsoring organisations, would have been required to sign up to and pay an annual fee to the authority.
While the Treasurer has made it clear that financial advisers and licensees are expected to adhere to the FASEA code of ethics, it will likely be more than a year before the Government establishes its single disciplinary body slated for the first half of 2021.
In the meantime, the Australian Securities and Investments Commission (ASIC) has been tasked with adjusting the regulatory settings to accommodate the interim period.