ASIC to grant 3-year exemption to AFS licensees from financial adviser compliance scheme obligations

Maria Nikolova

The compliance scheme regime will not be able to proceed at this time.

The Australian Securities & Investments Commission (ASIC) will provide relief to all Australian financial services (AFS) licensees from their financial adviser compliance scheme obligations after it became clear that the compliance scheme regime will not be able to proceed at this stage.

ASIC today announces that it will make a legislative instrument to provide the said relief. The decision follows a Government announcement last week. On Friday, the Hon. Josh Frydenberg MP, Treasurer, and the Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator the Hon. Jane Hume, said that the Government would accelerate the establishment of a single disciplinary body for financial advisers. This disciplinary body will displace the role of compliance schemes in monitoring and enforcing the Financial Planners and Advisers Code of Ethics 2019.

Due to this, compliance scheme applicants have withdrawn their applications to ASIC for approval of their compliance schemes. As a result, the compliance scheme regime will not be able to proceed at this time.

The regulator will grant a three-year exemption to all AFS licensees from the obligation in the Corporations Act 2001 to ensure that their financial advisers are covered by a compliance scheme, and from the associated notification obligations.

AFS licensees, however, will still have to take reasonable steps to ensure that their financial advisers comply with the code from January 1, 2020, and advisers will still be obliged to comply with the code from that date onwards. ASIC may take enforcement action where it receives breach reports.

Licensees are not required to take any action at this time. ASIC is set to make a public announcement when the legislative instrument providing the exemption takes effect.

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