ASIC will grant AFS licensees with relief from the obligation to ensure their financial advisers are covered by a compliance scheme.
As part of the government's decision late last week to accelerate the establishment of a single disciplinary body for advisers, compliance schemes will no longer monitor and enforce the Financial Planners and Advisers Code of Ethics.
However, enshrined in the Corporations Act 2001 is an obligation for AFS licensees to ensure that their financial advisers are covered by an ASIC-approved compliance scheme.
With the single disciplinary body now set to oversee code monitoring and enforcement, prospective compliance scheme operators withdrew applications to ASIC for approval of their schemes.
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This has left AFS licensees at risk of breaching the Corporations Act despite not having a compliance scheme to commit to before the original January 1 2020 deadline.
As a result, the corporate regulator has moved to grant a three-year exemption to all AFS licenses from the obligation. Though ASIC said licensees would still need to take reasonable steps to ensure their advisers complied with the code from January 1, with advisers still obliged to do so.
The government's announcement frustrated the advice sector, with Code Monitoring Australia - established by the Association of Financial Advisers and the Financial Planning Association of Australia among others - expressing its disappointment on Monday.
"The heads of Australia's six leading professional associations for financial advisers have expressed disappointment in the timing of the Government's decision today to not proceed with code monitoring, just a month before all financial advisers are due to have registered," Code Monitoring Australia said.
"Given the work that has been undertaken and costs incurred in good faith, we are disappointed that Code Monitoring Australia won't proceed.
"Today's announcement by the government makes it unreasonable for us to proceed."