The Morrison Government is accelerating the establishment of a new disciplinary system and single disciplinary body for financial advisers as recommended by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Government will work towards establishing the new body in early 2021, subject to the passage of legislation which will be introduced into the Parliament next year.
A long term sustainable solution based on Commissioner Hayne’s recommendations will replace the role of code monitoring bodies which were due to be established by industry associations under professional standards reforms.
A Code of Ethics will be applied by law from 1 January 2020, and financial advisers will be expected to meet the code’s high ethical standards. Australian Financial Services Licensees will also be required to take reasonable steps to ensure their representatives comply with the code. The Australian Securities and Investments Commission (ASIC) will be able to take action against licensees that fail to do so.
ASIC is considering the steps it needs to take to ensure that licensees do not breach the law by not registering advisers with a code monitoring body and will provide an update shortly.
The Government thanks the professional associations and acknowledges the considerable amount of time and resources that have been undertaken towards implementing code monitoring by the end of this year. Treasury will immediately begin engaging with these associations, consumer representatives and other stakeholders to consult on the new system. Roundtables will be held later this year to consider policy design and how to best transition to the new system.
These changes will not impact clients who seek access to redress through the Australian Financial Complaints Authority.
The Government is taking action on all 76 recommendations contained in the Final Report of the Royal Commission and, in a number of important areas, is going further. Restoring trust in Australia’s financial system is part of our plan for a stronger economy.