The Australian government will amend the law to give the corporate regulator more powers to hold advice licensees to account for misconduct under a new proposal.
The Treasury released a consultation paper, outlining further regulatory power for ASIC after the Royal Commission recommended that the financial service industry codes of conduct should be enforceable by the Australian regulator.
The Royal Commission noted that "there must be adequate means to identify, correct and prevent systemic failures in applying the code", and that "in order to do that, some provisions of the codes should be picked up and applied as law".
This is another step forward as part of the government's continued action on all 76 recommendations contained in the final report of the Royal Commission into misconduct in the banking, superannuation and financial services industry"
Treasurer Josh Frydenberg said in a statement: "This is another step forward as part of the government's continued action on all 76 recommendations contained in the final report of the Royal Commission into misconduct in the banking, superannuation and financial services industry."
The new consultation paper aims to amend the law to allow ASIC to approve codes for a wider range of entities than currently possible, and for these ASIC-approved codes to include 'enforceable code provisions', contravention of which will constitute a breach of the law.
It also proposes allowing ASIC to take into account whether particular provisions of an industry code have been designated as enforceable code provisions in determining whether to approve the code.
Last year, professional bodies representing the advice sector, including the Association of Financial Advisers (AFA) and the Financial Planning Association of Australia (FPA), signed a co-operative agreement to develop an ethics code monitoring solution.
Under the agreement, all existing advisers will be required to subscribe to an approved scheme by 15 November 2019.
The Treasury is welcoming responses to the consultation by interested parties until April 12.