ASIC Confirms Relief From Compliance Scheme Obligations in Effect

ASIC has taken action to provide certainty to Australian financial services licensees that they will not be in breach of the law because their financial advisers were not able to register with an ASIC-approved compliance scheme by 1 January 2020, as originally required.

The regulator confirmed it has granted a three-year exemption to all AFS licensees from the obligation in the Corporations Act 2001 to ensure that their financial advisers are covered by a compliance scheme and from the associated notification obligations.

ASIC announced in October that it would be taking steps to provide this relief to AFS licensees. It also stated then that licensees would still need 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.

It added that it may take enforcement action where it receives breach reports.

The regulator’s action follows 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 (see: Government Accelerates new Financial Adviser Disciplinary System…).

This disciplinary body will displace the role of compliance schemes in monitoring and enforcing the Financial Planners and Advisers Code of Ethics 2019.