The Australian Securities and Investment Commission has outlined what it expects of advice licensees in regards to enforcing the Code of Ethics, saying it will not monitor or enforce individual advisers' compliance.
The regulator said under the Corporations Act it does not have a role as a code monitoring body and is specifically prevented from exercising its power to ban an adviser for breaches of the code.
"As announced on 14 November 2019, ASIC has taken action to provide certainty to Australian financial services (AFS) licensees that they will not be in breach of the law because their financial advisers were not able to register with an ASIC-approved compliance scheme by 1 January 2020, as originally required," ASIC said.
The regulator stressed financial advisers will still be required to comply with the code from 1 January 2020 and AFS licensees will still be required to take reasonable steps to ensure that their financial advisers comply with the code.
ASIC said that after consultation with FASEA it will take a facilitative approach to compliance until the new single disciplinary body is operational.
ASIC said the "reasonable steps" it expects AFS licensees to take to ensure that advisers comply with the code include ensuring they know the date the code comes into effect; providing training to ensure conduct is consistent with the code; and ensuring proper communication channels are open to advisers who are seeking further clarification or have concerns.
"In determining what constitutes reasonable steps ASIC will take into account the context in which AFS licensees are operating," ASIC said.
"This includes the current dynamic regulatory environment, the timing of guidance provided by FASEA about the meaning of the code, and the evolving industry understanding about the meaning and implications of the code."
The announcement follows the government saying it would accelerate the establishment of a single disciplinary body for financial advisers and the withdrawal of applications for ASIC approval of a compliance scheme.
FASEA issued guidance about the interpretation of the code in October this year after its release in February.
"FASEA is currently consulting about the guidance. The new single disciplinary body will displace the role of compliance schemes in monitoring and enforcing the code," ASIC said.
ASIC said it will continue to take action where there are breaches of the law by financial advisers or their AFS licensees.