A new disciplinary body with the power to penalise financial advisers found wanting under a new financial services Code of Ethics is to be established in 2021.
Announced by the Treasurer, Josh Frydenberg, the entity will be part of a new disciplinary system being developed as recommended by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Treasurer said the new body would replace the role of code monitoring bodies which were due to be established by industry associations under reforms to their professional standards.
“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,” Mr Frydenberg said.
He said 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.”
He said ASIC was considering the steps it needed to take to ensure that licensees did not breach the law by not registering advisers with a code monitoring body.
Mr Frydenberg said Treasury would immediately begin engaging with professional associations, consumer representatives and other stakeholders to consult on the new system.
“These changes will not impact clients who seek access to redress through the Australian Financial Complaints Authority,” he said.
