Associations unite on ASIC approach to FASEA code

Both the Association of Financial Advisers and the Financial Planning Association of Australia have backed the corporate regulator’s approach to enforcing FASEA’s code of ethics.

The show of unity comes as ASIC outlined earlier this week how it would ensure advisers comply with the FASEA code. In particular, the regulator urged advisers to raise concerns with their licensees around how their systems and controls may hinder their ability to comply with the code.

AFA chief executive Philip Kewin said ASIC's outlined approach puts forward pragmatic guidance that gives licensees and advisers the level of confidence necessary for a 1 January 2020 commencement of the code.

"The AFA, along with a number of other professional associations, has been actively engaging with key stakeholders, including the government and ASIC, on an ongoing basis, and we are pleased to see ASIC announce what we believe is a sensible step towards achieving a workable outcome,” Mr Kewin said.


However, the AFA and FPA noted concerns around the practical workability of standard 3 addressing conflicts of interest and standard 7 regarding benefit payments and fees.

FPA chief executive Dante De Gori noted ASIC’s facilitative compliance in relation to standards 3 and 7, making it clear that the regulator will not act as a code monitoring body by monitoring and enforcing compliance against the code.

“It is important to note that facilitative compliance means ASIC will adopt a measured approach where inadvertent breaches arise or systems changes are underway, provided industry participants are making reasonable efforts to comply,” Mr De Gori said.

“We welcome today’s announcement from ASIC which acknowledges these standards require significant change, and we support a facilitative compliance approach to this.

“We have expressed our concerns that these two standards – which relate broadly to conflicts of interest (including fee and business models), remuneration models, referral arrangements, and gaining client consent from existing clients – need more clarification.”

Likewise, Mr Kewin said the AFA will continue to advocate for changes to standard 3 and further guidance across the board, in particular with respect to standard 7 and scaled advice.

"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.

Associations unite on ASIC approach to FASEA code
Philip Kewin and Dante De Gori
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Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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