Financial Advice Compliance Scheme

October 3, 2018

 

 

 

Last week the Australian Securities and Investments Commission (ASIC) released guidance on a code of ethics around financial advice compliance schemes.

 

This is timely since the release of this guidance coincided with the released of Interim report of the Royal Commission misconduct in banking, superannuation, and the financial services industry.

 

Conflicted remuneration and fees-for-no service played a significant part in Royal Commission proceedings.

 

 

Compliance Scheme Approval

The Approval and Oversight Schemes for Financial Advisers will impact those who are authorised to give advice under the new professional standard in 2020.

 

This code has been developed by one of the co-regulators for the new professional standards, the Financial Advisers Standards and Ethics Authority (FASEA).

 

Peter Kell, Deputy Chair of ASIC who announced his resignation last month despite his extended term, said that there needed to b air and transparent compliance schemes.

 

 “Effective compliance schemes are a key component of the reforms that will require higher standards of ethical behaviour and professionalism among financial advisers.” He explained 'Our guidance requires high standards for compliance schemes, reflecting the significant responsibility that monitoring bodies operating compliance schemes will have. This includes the responsibility to effectively monitor and sanction adviser members if required.”

 

ASIC indicated that the new standard sets out their compliance scheme approval process:

 

  • our expectations for the governance and administration, monitoring and enforcement processes, and ongoing operation of compliance schemes

  • how we will exercise our powers to revoke the approval of a compliance scheme and to impose or vary conditions on the approval, and

  • the notifications that monitoring bodies must make to ASIC.

 

You can download The Approval and Oversight Schemes for Financial Advisers here.

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©2018-2019 by The GRC Institute - Governance, Risk & Compliance.  ABN: 42862119377