The securities regulator has revealed that only six licensees have reported breaches of the Code of Ethics by advisers since January, calling into question the efficacy of the Treasurer Josh Frydenberg’s October 2019 decision to give licensees the temporary role of ethics overseers for their authorised representatives.

This week the Parliamentary Joint Committee into ASIC’s oversight published the answer to a question from ALP Senator Louise Pratt in February that was taken on notice by executive director of wealth management, Joanna Bird regarding the timeline of the FASEA Code of Ethics compliance schemes.

After detailing the timeline of the scheme – including the Government’s backflip from wanting a code monitoring body to wanting a statutory single disciplinary body, with licensees in charge of adviser ethics adherence in the interim – the response revealed just how reluctant licensees have been to report their own advisers’ shortcomings.

“ASIC has received a small number of breach notifications (6 in total) from AFS licensees about the licensee failing to take reasonable steps to ensure their advisers comply with the code,” the notice stated.

In a separate response to a question taken on notice by Bird on the same day, the regulator revealed Queensland as the state with the most banned advisers over the last 12 months.

Out of 44 advisers banned, 13 of those were from Queensland, 11 were from NSW and nine were from Western Australia, ASIC stated. Eight came from Victoria and three from South Australia, while none came out of the Northern Territory, Tasmania or the ACT.

In a third notice, ASIC also revealed that 802,000 searches were logged on it’s Financial Adviser Registry from 1 July 2019 to 29 February 2020. This compares to 807,000 searches in the entire 2018/19 financial year and 574,000 in the 2017/18 financial year.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
One comment on “Only 6 licensees reported code breaches so far: ASIC”
  1. If you look at the Code and the legislated consequences framework applicable, is it expected that a large number of AFSL have reported Code breaches?
    Most of the remedies could be dealt with in-house, and are designed to improve behaviour, not drive Advisers out of the system. (The benchmark is now high to be a financial planner so I expect that Advisers will want to hold onto that accreditation.)
    Where the breach coincides with a Reportable breach, the Adviser is in the hot seat well and truly however, Licensees have an established framework for that.
    The main thing here is that we need to re-frame the Code and it’s place. It is not another body of black letter law, it is designed to influence behaviour and, overtime, will likely see Advisers taking more responsibility for their position in the matrix.

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