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ASIC commences ethics compliance consultation

ASIC commences ethics compliance consultation

The corporate regulator has issued a consultation paper on its proposed approach to approving and overseeing compliance schemes for financial advisers.

Incoming training and education requirements for financial advisers include obligations to comply with a code of ethics that is being developed by the Financial Adviser Standards and Ethics Authority (FASEA).

ASIC deputy chair Peter Kell said that compliance with the incoming adviser code of ethics (being introduced as part of the incoming education and training standards) will be a “key component” of professionalism in the industry.


“Monitoring and enforcing compliance with the code of ethics is a significant responsibility that will be resource-intensive for the bodies that take on this role,” Mr Kell said.

“The compliance scheme framework is key to the successful operation of the proposed code of ethics, which must have the greatest possible influence on the behaviour of financial advisers.”

Compliance with the code will be overseen by ASIC-approved compliance schemes, the regulator said, and will need to be “robust, transparent, fair and consistent” to be effective.

The consultation, which is open until 28 June 2018, comes as the mortgage industry works on its own code of conduct.

As announced by the Combined Industry Forum’s package of reforms, by the end of 2020, brokers will be given a “unique identifier number” and be subjected to a new code of conduct.

While the industry code is still under development, the CIF outlined that it would begin working on a new code by “mid 2018”.

The report reads: “The proposed reforms will be industry-led, and individual industry participants have committed to taking immediate steps (having regard to competition law requirements) to implement the reform package. However, to ensure the ongoing viability of the reforms and equal consumer protections, the reforms will need to be captured in an industry code that enables enforcement, applies across the industry and includes new participants over time.

“The CIF is considering a number of approaches, including working with ASIC on establishing an ASIC-approved code for all participants in the mortgage industry, and/or repurposing current industry codes to include these reforms, and to house the appropriate monitoring and compliance functions.”

The code will reportedly take into account the outcomes of the ASIC Enforcement Review’s assessment of ASIC’s code approval powers, and any new obligation for industry participants to subscribe to an approved industry code.

The report continued: “A ‘mortgage broking industry code’ would apply to mortgage brokers, lenders, aggregators and, where appropriate, referral businesses and would be subject[ed] to all applicable regulatory and competition law approvals.”

The chair of the CIF, Anthony Waldron, has previously said that the mortgage industry code could either be a repurposed code that already exists (such as one used by industry bodies) or one led by ASIC.

“This is a coded, directional piece to say, [and] we want to make sure that the industry takes it seriously and that the government and all players can be ensuring that they are comfortable the industry is moving forward. The code will provide that ongoing monitoring to ensure that it will happen in the future,” Mr Waldron told Mortgage Business sister title The Adviser last year. 

ASIC has said that it intends to release a regulatory guide setting out its final policy for the approval and oversight of compliance schemes for financial advisers by the end of September 2018.

[Related: Brokers to have new code and unique identifier numbers]

ASIC commences ethics compliance consultation


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