ASIC has no intention of checking whether licensees are monitoring their representatives’ adherence to FASEA’s Code of Ethics or even whether licensees have systems in place to do so, the regulator’s commissioner Danielle Press, said.
“Let me be clear, on the 2nd of January 2020, I’ll have much better things to do than come knocking on your door to make sure you’ve got a system in place. I’m just saying we don’t have a work plan that says we are going to do this in January, February or March. You’ve got time to make sure it’s going to work,” Press told an room full of delegates at the FPA’s Professionals Congress in Melbourne on Thursday.
Licensees were given responsibility to monitor advisers’ adherence to the new code following an announcement by Treasurer Josh Frydenberg to delay the requirement for all practitioners to be a member of a code monitoring body for up to three years. ASIC has regulatory oversight for the statutory Code of Ethics that applies to all registered financial advisers giving advice to retail clients from January 1, 2020.
“We do not have plans to go into licensees individually and check whether individual advisers are adhering to the code. We don’t have the resources or the time to do that and we believe you need time to monitor the code,” she said.
While Press said she expected licensees to take “reasonable steps” to ensure advisers are compliant, she acknowledged that FASEA still hasn’t completed its guidance and that questions remain relating to how aspects of the code will apply in practice. Press joined FASEA CEO Stephen Glenfield on stage along with Julie Berry, a director of the Tax Practitioners Board.
“Reasonable steps does give you some time to check… It takes into consideration the difficult we are currently experience around the guidance,” she said.
Earlier in the week ASIC announced it planned to take a “facilitated approach” to regulating adherence to the Code of Ethics and offered licensees guidance on how to monitor the code in lieu of a separate code monitoring solution.
ASIC’s approach to policing business models that accept grandfathered commissions post is likely to be less consultative than its policing of the Code of Ethics, Press highlighted. ASIC is currently investigating the payment and receipt of grandfathered commissions across the wealth management industry in light of the government’s decision to ban these commissions from January 1, 2021.
“I spoke to a couple of people yesterday and they thought there might be a transition period from January 2021 – I can confirm this is your transition period,” she said.