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Industry bodies welcome ASICís ethics guidance

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The Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) have welcomed the Australian Securities and Investments Commission’s (ASIC) decision to take a “facilitative” approach to contentious ethics standards.

The regulator has released guidance for how licensees can monitor their advisers’ compliance with the incoming Financial Adviser Standards and Ethics Authority (FASEA) Code of Ethics, which deals with conflicts of interest and adviser benefit payments and fees.

ASIC’s three-year compliance exemption means financial planning practices are now responsible for making sure their advisers reasonably comply with the FASEA code from January 1.

This means making sure their advisers are aware of complying with the code, providing training and guidance on the proper conduct, assisting them to raise concerns with the business about how its systems and controls may hinder code compliance, and consistently monitoring code compliance along with monitoring adviser conduct.

FPA CEO Dante De Gori says the two standards 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 under way, provided industry participants are making reasonable efforts to comply,” he says.

And AFA CEO Philip Kewin says ASIC’s approach is pragmatic and gives advisers the confidence they need for a January 1 start date.

But AFA will continue to advocate for changes to the standards, given the practical workability issues and guidance.

“FASEA now has an opportunity to engage in genuine consultation to ensure the code sets the appropriate standards while at the same time being realistic,” Mr Kewin said. “AFA will continue to work with other professional associations and stakeholders including the Government, regulators and FASEA, to arrive at sensible outcomes.”

FPA has also welcomed the announcement from the Australian Financial Complaints Authority (AFCA) that it will be taking a “measured and considered approach” to conduct obligations in the code until a disciplinary body is established.

It will assess whether advisers have reasonably met conduct standards, while also being mindful that interpretation of the standard is still being refined, AFCA Deputy Chief Ombudsman Dr June Smith says.

It will start assessing adviser conduct after January 1.

Mr De Gori says ASIC and AFCA’s approach will give advisers “much-needed breathing space” next year for the industry to work with FASEA through uncertain parts of the code.

The Federal Government is currently developing a single disciplinary body for the industry to monitor compliance.