ASIC Reveals Code of Conduct Process

4

The Australian Securities and Investments Commission (ASIC) has shed some light on the process it will follow to approve industry codes of conduct, giving indications that it may be some time before the issue is resolved.

Speaking at a joint Financial Services Council and Association of Financial Advisers forum in Sydney this week, ASIC Commissioner, Peter Kell, said there were a number of steps which the Commission would undertake before it could accept codes for review.

“We will publish guidance on our approach to the approval of codes in the financial advisory sector,” Mr Kell said, but explained that this would not occur until the legislation had passed Parliament and Treasury regulations were released.

“Not surprisingly, we do not yet have a detailed, concluded view as to what would be required to meet the proposed test that ‘… ASIC is satisfied that the code of conduct obviates the need for persons bound by the code to be bound by the opt-in requirement’.”

… obviating the need for opt-in via subscribing to a code does not mean that financial advisers will suddenly have no responsibilities…

However, Mr Kell hinted that rather than remove the need for opt-in, codes would still need to include provisions that achieve the same outcome as the regulation intends to achieve.

“I’m sure it will not come as a surprise to hear that at this early stage our view is that obviating the need for opt-in via subscribing to a code does not mean that financial advisers will suddenly have no responsibilities and obligations in this area,” he said.

Again on the issue of timing, Mr Kell warned that once guidance had been published, the approval of codes may take months, not days or weeks, raising concerns about whether the assessment process would be complete prior to the commencement of the FoFA legislation in 2013.

Despite these potential delays, Mr Kell said he believed there was sufficient information already available for industry bodies to start developing appropriate codes.

“Our ability to approve codes is not new,” he said.  “ASIC has long had a public policy statement on how it will exercise its existing code approval power, Regulatory Guide 183.”

RG183 sets out a checklist for code development and review, including requirements that:

  • The document be freestanding and written in plain language
  • The code must be enforceable against subscribers/members
  • Compliance with the code is monitored and enforced
  • There is a mandatory regular review of the code

“In other words,” said Mr Kell, “A code is something that has to be taken seriously.”

ASIC says it intends to consult further with industry on the responsibilities and requirements of code members, and how it will approach the opt-in relief.



RELATED ARTICLESMORE FROM AUTHOR

4 COMMENTS

  1. “indications that it may be some time before the issue is resolved”…wow what a surprise…

  2. Peter Kell’s comments to me suggests to me that:
    * ASIC intends to adopt a ‘black or white’ policy with his policeman’s helmet on and truncheon in hand
    * Peter Kell and ASIC really still have no idea of how this industry works
    * Is not remotely interested in how the adviser / client relationship works
    * Has no interest in knowing that the unquestioning additional cost that ‘hunting’ for breaches is going to significantly add layers of cost to the advice industry at all levels
    * Higher costs will exclude not only low income earners from the financial advice market but also most of middle income earners.
    * Scaled advice will be a disaster but ‘best interests’ will see most advisers opt out of offering full scale comprehensive service in favor of scaled and limited scoped advice because the risks of providing full scale advice will simply become too onerous and too risky for financial planning professionals.

  3. Opt in that these people lose their jobs!!
    A new Government is needed to re-evaluate this whole issue with some due consideration & common sense.

  4. I think it’s about time that regulators leave the financial planning industry alone…let us get on with helping Australian families. Too much regulation will cause good quality financial planners to leave the industry. Who then pays for that? Clients.

Comments are closed.