ASIC releases new reference checking protocol for advisers
The regulator has released a reference checking and information-sharing protocol for financial advisers and mortgage brokers.
ASIC has made the “ASIC reference checking and information-sharing protocol” (ASIC Protocol) that will give effect to the financial services royal commission’s recommendations to improve reference checking in the financial advice and mortgage broking industries.
ASIC has also released guidance documents that will help Australian financial services (AFS) and credit licensees comply with their new reference checking obligations.
The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (the act) introduces obligations on AFS licensees and credit licensees to comply with an ASIC Protocol in relation to reference checking. The act and the ASIC Protocol commence on 1 October 2021.
“The ASIC Protocol sets out obligations for licensees to undertake a reference check and share information on an individual seeking to be employed or authorised as a financial adviser or mortgage broker,” ASIC stated.
“The reforms will promote better information sharing about the performance history of financial advisers and mortgage brokers — focusing on compliance, conduct and risk management.”
To help licensees comply with the new reference checking requirements, ASIC noted it has prepared an information sheet and published examples of references as a guide. Consequential updates to existing ASIC guidance have also been made to reflect the new requirements.
“In finalising the ASIC Protocol, ASIC took into account industry feedback on the proposals in Consultation Paper 333 Implementing the Royal Commission Recommendations: Reference checking and information sharing (CP 333), which was released in November 2020,” the regulator said.
“ASIC has also released Report 694, which highlights the key issues raised in submissions to ASIC on CP 333 and details ASIC’s responses on those issues.”
This comes after the corporate regulator released IDR reporting documents set to be tested in a pilot involving financial firms later this year.
The pilot versions of the dictionary and glossary were developed through two rounds of public consultation and aim to “align as closely as possible with the reporting approach of the Australian Financial Complaints Authority”.
Key changes made in response to the consultation include removing free-text fields and mandatory reporting of demographic information and to allow flexibility to include multiple products and/or services and issues per complaint.