Six peak groups representing financial advisers have withdrawn plans to create a new entity to monitor adherence to ethical standards after the federal government said it would establish a new financial adviser disciplinary body as recommended by the Hayne royal commission.

After Treasurer Josh Frydenberg and Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hune, said on Friday the new disciplinary body would be set up in early 2021, the six peak groups withdrew their application for ASIC to approve a new entity, Code Monitoring Australia (CMA), to oversee ethics and education standards.