The Australian Securities and Investments Commission (ASIC) has indicated it is serious about tracking down Future of Financial Advice (FOFA) non-compliance, warning against just “ticking boxes”.
In an opinion article published in The Australian today, ASIC deputy chairman Peter Kell said the corporate regulator says financial services organisations now need to develop a deep culture of compliance – something, he says, that must be led by senior management.
“A compliance culture must be driven from the top down. A compliance system that is simply treated as an add-on required by law ultimately will be useless,” Mr Kell said.
“An effective compliance system must be sustainable and built into and integral to an organisation’s business model. Having a folder full of policies and procedures is just mere window dressing if they are not lived and breathed and not policed for effectiveness.”
Mr Kell said the ultimate yardstick of a sound compliance culture was the “quality of advice” offered by a practitioner or firm, stating that ASIC will be holding executives to account for insufficient advice given to their staff.
“If non-compliance is tolerated, even implicitly, it is a strong sign the culture is weak,” he said.
However, while maintaining that the regulator intends to act on the “enhanced enforcement powers” awarded to it by FOFA, the deputy chairman also indicated some sympathy for advice firms as they face the task of becoming compliant.
“We recognise some reforms will force organisations to do major work so that IT systems and adviser training are in place,” he said. “So, for the first 12 months, ASIC will take a facilitative approach to inadvertent breaches and look favourably on those making a reasonable effort to comply.”
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