The move comes as the government looks to wind up the Financial Adviser Standards and Ethics Authority (FASEA) by moving its standard-making functions to the Treasury, with standards to be set by legislative instrument.
Remaining elements of FASEA’s current role, including administering the adviser examination, will be incorporated into ASIC.
Treasurer Josh Frydenberg and Assistant Minister for Superannuation, Financial Services and Financial Technology Senator Jane Hume said the changes would put into effect a key recommendation from the Hayne royal commission that called for a single, central disciplinary body to be established for financial advisers.
However, instead of establishing a new body, ASIC’s Financial Services and Credit Panel (FSCP) will see its role expanded to take on the new function.
The FSCP currently supports ASIC in the exercise of its regulatory functions with respect to the making of banning orders against individuals for misconduct.
“Expanding the role of the FSCP will leverage its extensive expertise and existing governance structures, avoiding the need to establish a new body to perform this role,” said Mr Frydenberg and Senator Hume in a joint statement.
“Consolidating this new function within ASIC will also avoid regulatory overlap and minimise the possibility of multiple investigations by multiple agencies into the same conduct related to the provision of financial advice.
“These reforms will further streamline the number of bodies involved in the oversight of financial advisers, resulting in FASEA being wound up.”
CPA Australia general manager of external affairs Dr Jane Rennie said the government’s decision to disband FASEA was a good first step, but more needed to be done to reduce the regulatory burden on advisers.
“Practically, this decision does little to address overlapping, duplicated and sometimes conflicting regulatory requirements on financial advisers,” Dr Rennie said.
“Transferring responsibilities from FASEA to ASIC and Treasury, without wholesale regulatory reform to address these issues, is akin to kicking the can down the road.
“The government must do more to address the causes of the regulatory and compliance burden on financial advisers. Until they do, we will not solve the problem of advice affordability and accessibility in Australia.”
The development comes after the independent review of the Tax Practitioners Board had also recommended that a new model of regulating tax (financial) advisers be developed to create a single point of registration for individuals and to require advisers to abide by only one code of conduct.
The government agreed with the recommendation, noting that this new system would cover all financial advisers, including individual tax (financial) advisers, and that they would only be subject to one disciplinary regime.
The government is set to introduce legislation implementing these reforms in the first half of 2021.
The demise of FASEA
The standards setting body had been on the back foot since being established in April 2017, with the accounting profession expressing confusion around the new education requirements and its policy on prior learning.
The federal opposition had also taken a shot at the government in handling the rollout of FASEA, pointing to how the organisation went through three CEOs in two years.
The government notes that the Treasury and ASIC will now work closely with FASEA to ensure an orderly transition to the new regulatory framework.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.