Financial Regulatory Environment

Topics: Financial adviser, Financial services, Regulation Pages: 3 (758 words) Published: May 5, 2011
regulatory framework that financial advisers must consider, and by which they must abide There are a number of regulators in which financial advisers must consider and abide to ensure that clients and their assets are protected, and can confidently depend on a financial adviser in planning their retirement. The core of the regulatory environment within which financial advisers must consider is the Corporations Act along with the Financial Services Reform Act, and the Financial Planning Association's Code of Ethics and Rules of Professional Conduct. ASIC is the major regulator in this industry and administers the FSRA and Corporations law as it relates to the financial services industry. All financial advisers have a fiduciary duty to their clients, regardless of whether there is a formalised agreement or contract between them. This is known as the " Know your Client" Rule, which states the adviser must always put the client's best interest first, and have a reasonable basis for advice. These rules are subsumed into FSRA and aim to protect the client from poor advice Other regulators which are considered are:

Australian Prudential Regulatory Authority (APRA) which is responsible for the prudential regulation of deposit taking institutions, life and general insurance and superannuation;

Australian Competition and Consumer Commission (ACCC) which administers the Trade Practices Act. •Australian Taxation Office (ATO) which administers the taxation law and certain self-managed funds; and •Reserve Bank of Australia (RBA) who is responsible for the monetary regulation.

Other sources of regulation include the Privacy Act 1998, the Superannuation Industry (Supervision) Act, and the Insurance Contracts Act.

(CCH, 2009)

the standards outlined in the FPA Code of
Client First : Requires the financial planner to act honestly and always place the client's interest ahead of their own personal or employer's gains or interests.

Integrity: The...
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