A fundamental requirement of any organisation that develops a code of practice to obviate the opt-in provisions of the Future of Financial Advice (FoFA) reforms is that it must have the resources and the will to monitor compliance and to take effective action over code breaches.

The chairman of the Financial Planning Association, Matthew Rowe, says if an organisation is not committed to policing its own code, and doesn’t have the resources to do so, then it “should not be talking about issuing a code and you should not be misleading people around the [idea] that you’re going to have a code”.

“It’s pretty simple: if it’s our code, and we’re the code owner, then it’s our responsibility,” Rowe says.

“We would share that with some of our partners – that is, licensees – and I would hope there’d bee a free flow of information between ourselves and the licensee.

“There might be a complaint that comes in against a member – say, though our whistleblower mechanism – and we’d be dealing with that, through our conduct review process, but then if we have, for example, a professional partner who has agreed to sign up to our code…then we would be looking to work with them around actions as well.”

On Tuesday the ASIC Commissioner Peter Kell raised the issue of code compliance and told the Association of Financial Advisers’ (AFA) national conference on the Gold Coast that “given the way codes are going to work, it’s very important that those who actually provide the codes – the operators of the code, if you like; the code owners – must maintain a publicly searchable and up-to-date member register”.

“This is because we think there could be many more advisers subscribing to industry codes; it’s going to help those in the industry; it’s going to help licensees; and it’s going to help consumers of we have that sort of requirement in place,” Kell said.

But Rowe says the code owner’s responsibilities go much further than just maintaining a searchable register.

“It raises for me a more significant issue, and that’s around resources,” Rowe says.

“To my mind, having eight bullet points or a three-page piece of paper that says, ‘This is our code’, misses the point. Having a document that says that this is our code and this is what we expect of our members, and then not having governance, not having an accountability framework, not having the resources – I know what it costs for us to run that, and I know how long it took us to build it.

“If you do not have the resources and you do not have the infrastructure and you do not have the governance mechanisms and you do not think that you can even run, through your own database, investigations, monitoring and surveillance actions around your code, you should not be talking about issuing a code and you should not be misleading people around the [idea] that you’re going to have a code.”

Rowe says the regulator will conduct its own form of due diligence on any organisation that applies to have its code approved, and it would be “devastating” if individual practitioners were to join an organisation “because they have a code that meets a minimum requirement, and it’s just tick-a-box to obviate opt in”.

“If people go into it with that idea, then we should give up trying to be a profession,” Rowe says.