Question

Identify and explain the regulatory basis for risk disclosure in the Australian financial planning industry.
(Name relevant industry codes of practice and conduct).

Answer 1

Together with ASIC and the RBA, these four entities comprise the Council of Financial Regulators in Australia.

· The Australian Securities and Investments Commission.

· The Reserve Bank of Australia.

· Treasury.

· The Australian Prudential Regulatory Authority.

· Council of Financial Regulators.

The CFR is the coordinating body for Australia's main financial regulatory agencies. There are four members: the Australian Prudential Regulation Authority the Australian Securities and Investments Commission the Australian Treasury and the Reserve Bank of Australia, which chairs the Council.

Regulatory authorities in Australia

Confidence in the operation of the companies within ASX Group is reinforced by the whole-of-market regulation undertaken by ASIC across all trading venues and clearing and settlement facilities, as well as the financial system stability oversight by the RBA of ASX’s clearing and settlement facilities. ASIC also supervises ASX’s own compliance with the ASX Listing Rules as a listed company.

Additional responsibility for regulation of the Australian financial system lies with Treasury and APRA. Together with ASIC and the RBA, these four entities comprise the Council of Financial Regulators in Australia.

The Australian Securities and Investments Commission

ASIC is responsible for the supervision of real-time trading on Australia’s domestic markets, including those operated by ASX Group, and for enforcing the laws against misconduct on Australia’s financial markets, as well as supervising Australian Financial Service Licence holders. More information about ASIC

The Reserve Bank of Australia

The RBA has responsibility for assessing whether licensed clearing and settlement facilities, including those operated by ASX Group, have complied with the RBA’s Financial Stability Standards (“FSS”) and done all other things necessary to reduce systemic risk. More information about the RBA

Treasury

The Department of the Treasury is an Australian Federal Government department which develops economic policy. Treasury works with the RBA, ASIC and APRA on the Council of Financial Regulators.

Relevant industry codes are:

The purpose of an industry code is to ensure industry compliance with an agreed upon set of objectives that benefit workers, employers and consumers. These objectives usually concern the promotion of best industry practice, improving safety standards and enhancing consumer confidence.

The benefits of an industry code of conduct

An industry code of conduct provides a range of benefits to both industry and consumers such as:

• The creation and enforcement of appropriate industry practices formulated by industry experts.
• The flexibility of an industry code allows businesses to respond to recurring market issues and adapt to changing consumer needs.
• A business-friendly alternative to legislation that can result in reduced costs for industry and government.
• Providing safeguards and protection for consumers.

The purpose of an industry code is to ensure industry compliance with an agreed upon set of objectives that benefit workers, employers and consumers. These objectives usually concern the promotion of best industry practice, improving safety standards and enhancing consumer confidence. Similarly, the purpose and objectives must be clear and communicated to stakeholders, industry participants and consumers.

An industry code of conduct will set out a framework for compliance through provisions such as:

• Specific measures for compliance, relevant guidelines, standards and practices;
• Risk management strategies;
• Complaint handling schemes and sanctions for non-compliance; and
• An outlined process for periodic review of the code.