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Industry bodies respond to ASIC FOFA codes guidance

Financial advice industry bodies have welcomed the Australian Securities and Investments Commission’s release of guidance on Future of Financial Advice (FOFA) codes of conduct, including its ruling out of applications for opt-in exemptions from single entities.

Financial Planning Association (FPA) chief Mark Rantall told ifa that ASIC’s approach was a “sensible solution to the opt-in dilemma”, following the regulator’s release of additional guidance earlier today.

"We never thought licensee codes were appropriate – the monitoring aspects are too complex and it would be virtually impossible to get industry alignment of the structure of those codes," he said. "[The FPA] welcomes the fact that ASIC hasn't gone down that path."

However, the FPA confirmed that it will continue to push for “full code approval".

"We believe pursuing that course will provide better professional recognition – you need both a complete professional code of conduct, a certification program and an ongoing commitment to certification," he said.

The Association of Financial Advisers (AFA) also welcomed the guidance and the opportunity to work with the regulator in preparing advisers for FOFA. "The guidance now allows the financial advice industry to get on with the business of planning out how to leverage this exemption in a manner that is both good for consumers and effective for advisers," said AFA CEO Brad Fox in a statement issued on Friday.

"Given that the opt-in obligation is still more than two years away from applying to clients, this clarity means that advisers and licensees can focus their attention on the far more pressing issues of compliance with fee disclosure statements and conflicted remuneration, enabling them to take the time to consider fully how they wish to be bound by a code of conduct," he said. 


"The AFA is giving active consideration to a limited code, which relates only to Opt-in. This limited code would be subject to ASIC approval,” Fox added, differing slightly from the FPA position.

“Limited codes do not prevent the existence of other strong, robust, comprehensive codes that do not require ASIC approval.”

The ASIC guidance confirmed that the regulator will accept an application for approval of a code with limited content – for the purposes of FOFA only – offering a checklist of code content that "obviates the need" for complying with the opt-in requirment.

"A FOFA code approved under our policy will provide a flexible alternative to complying with the opt-in requirement," said ASIC Commissioner Peter Kell.

"In particular, under a FOFA code ongoing client arrangements may not terminate in the same way that they do under the law."

The guidance also makes clear that "approved FOFA codes must meet substantially the same policy objective as opt-in: that is, they must promote client engagement and ensure clients do not pay ongoing financial advice fees where they are receiving little or no service".

ASIC will publish guidance on the FOFA conflicted remuneration provisions on Monday 4 March.