ASIC consults on code approval under FOFA

ASIC has released a consultation paper on its approach to code approval and relief powers under the Future of Financial Advice (FOFA) reforms.

ASIC also confirmed that it will be taking a facilitative approach to the implementation of FOFA. 

Codes Approval
ASIC has existing power under the Corporations Act to approve codes of conduct, with Regulatory Guide 183 Approval of financial services sector codes of conduct (RG 183) setting out ASIC’s minimum expectations in this area.

Consultation Paper 191 Future of Financial Advice: Approval of codes of conduct for exemption from opt-in requirement (CP 191) seeks feedback on how RG 183 should be amended for FOFA. It is relevant to advisers and industry representatives who are considering submitting either a new or existing code for approval.

CP 191 covers matter such as:

• appropriate content of a code submitted for approval, including methods to obviate the need for opt-in
  administration, governance, monitoring and enforcement of codes, and
• ASIC’s approval and relief process.

ASIC Commissioner Peter Kell said membership of a code should not be seen as an easy option for compliance.

‘Obviating the need for opt-in via subscribing to a code does not mean financial advisers will suddenly have no responsibility or obligations in this area,’ Mr Kell said.

‘We expect codes will contain provisions that require members to have active obligations towards their clients that will achieve the same outcome as the opt-in requirement intends to achieve. That is, to prevent disengaged clients from paying ongoing advice fees for services of little or no value.’

ASIC will consider applications for approval of a FOFA code once final policy is published in RG 183. The code approval process will be careful and rigorous and it will take months rather than weeks for ASIC to assess a code. ASIC notes that unless a licensee opts in to the FOFA regime before 1 July 2013, the earliest date an adviser would need to comply with the opt-in requirement, or join an approved code, is 1 July 2015.

Mr Kell encouraged industry to engage in this consultation process.

‘We encourage advisers, industry code representatives and consumer representatives to have their say, and are particularly interested in feedback about whether ASIC should modify its existing approach to defining what is a code in RG 183 for a FOFA code,’ Mr Kell said.

Submissions to CP 191 close on 3 December 2012.