On 23 October 2012, ASIC reaffirmed that it will take a facilitative approach during the first 12 months of the FOFA reforms from 1 July 2013. ASIC Commissioner Peter Kell said that "ASIC recognises in a number of areas that FOFA will require businesses to undertake major work so that IT systems and compliance requirements are in place for the new regime". ASIC will adopt a measured approach where inadvertent breaches arise or systems changes are underway, provided industry participants are making reasonable efforts to comply. It is less clear whether leniency will be shown where licensees are viewed by ASIC as not having taken sufficient steps to facilitate the FOFA changes.
Clearly, ASIC wants to be sure that businesses are undertaking the necessary work to allow for compliance with FOFA.
ASIC has also released proposed guidance to the application of codes of conduct providing relief to the obligations of opt-in under FOFA by way of Consultation Paper 191 (CP191), which discusses potential changes to ASIC Regulatory Guide 183: Approval of financial services sector codes of conduct (RG183).
ASIC is clear that the purpose of the opt-in requirement under FOFA is to protect disengaged clients from paying ongoing financial advice fees where they are receiving little or no service. In real terms, this means that any code of conduct approved by ASIC will need to satisfy the overall practical effect of opt-in.
Some of the suggested code provisions in CP191 include:
Comments are due on the consultation paper by 4 December 2012. ASIC has proposed to release a regulatory guide in February 2013.
To download a full copy of Consultation Paper 191 visit www.asic.gov.au or click here.
Industry initiatives consistent with CP191
The FPA has released an FPA Consultation Paper on the modifications to the FPA Code of Professional Practice to incorporate FOFA for industry consultation. The FPA has suggested amending its Code of Professional Practice to include the following processes in relation to opt-in:
The AFA has also announced that it will be amending its Principles of Practice to fit with ASIC's guidance for an opt-in code.