Addressing the Stockbrokers and Financial Advisers Association virtual conference on Friday, Ashurst partner Jonathan Gordon said the “black and white terms” in which the FASEA code had been drafted meant its standards could be strictly enforced by the courts regardless of the authority’s guidance on how to interpret them.
“The authority have said you have nothing to worry about if you meet the values under the code – unfortunately that’s not how lawyers look at things and they will be involved. ASIC will be investigating customers making complaints, contractual parties will be giving the terms legal meaning and lawyers will look at it and pick apart those standards,” Mr Gordon said.
“If you look at the obligations we’ve got under the Corporations Act to act efficiently, fairly and honestly, they are being enforced in a way that they weren’t up until a few years ago. The courts are giving extended meaning to that and I think they’ll give an extended meaning to the standards under the code.”
FASEA chief executive Stephen Glenfield, who also participated in the conference session, said the authority had created the code with the intention to be a “behavioural overlay” on adviser conduct, particularly in regards to Standard 3, which stated that advisers must not act for a client where they had a conflict of interest.
“Some of the commentary that continues [about the standard] is different to the intent that the regulator who has promulgated the standard has explained,” Mr Glenfield said.
“If you think about how you apply it to your day-to-day operation, applying the totality of the standards helps to identify if you have a conflict. Giving advice for a fee that is fair under the standard is not seen by FASEA to be a conflict.”
Following the news earlier in the conference that the establishment of the government’s single disciplinary body to enforce the code would be delayed until the end of 2021, Mr Glenfield said the authority would continue to release new guidance to clarify the application of the code in different scenarios.
Mr Gordon said the interpretation of the code would need to be “tightened up over time” to avoid leaving advisers open to legal action around perceived breaches of Standard 3.
“Avoiding any conflict of interest is actually impossible because that test has no element to it of materiality or proportionality – the smallest holding in BHP may present a conflict of interest if one wants to be difficult in applying it,” he said.
“The challenge is regardless of guidance it will still fall to others to enforce those provisions or seek recourse through AFCA or the courts. I think the intent is good to provide that guidance but it will evolve over time and the courts and others will have to deal with it.”
My FASEA colleague, Dr Longstuffed, also thinks this is all hyped bulldust from the lawyers and you should buy his book! After all we have carefully integrated questions into the exam based on this book that hardly any adviser has ever heard about before just to generate some sales! Or just enroll to do your further education with my other employer (paycheck) Griffith as we need to replace all the income from overseas students somehow!?
What’s Ethics says the FARSEA Board.
The FARSEA board would NOT pass their own Values or Standards with their conduct.
FARSEA’s board is completely corrupt !!!!!
Hey Glenfield – [b]IT’S THE VIBE isn’t it ??? [/b][b][/b]
You are even more useless than bumbling Dennis Denuto.
Glenfield says -[b] “in summing up it’s the FARSEA behavioural overlay, it’s the totality, it’s Mabo, it’s justice, it’s law, it’s the vibe, and……no that’s it……it’s the vibe. I rest my case” [/b][b][/b]
What an absolute FARSEA !!!!!!!!!!!
Just shut down the industry and start again.
Financial planning is now up there with the medical industry in terms of being open to litigation
Difference is in financial planning you are considered guilty and have to prove your innocence.
FASEA must change the actual Code. Standard 3 should be extended to say…
You must not advise, refer or act in any other manner where you have a conflict of interest or duty, [i]if the client’s best interest is likely to be compromised.[/i][i][/i]
Glenfield keeps saying this is what it’s [b]intended[/b][b][/b] to mean. If this is the intention, then change the Code to reflect that intention. At the moment the Code could be interpreted by a biased regulator or court to preclude any financial advice for remuneration, as all remuneration methods are conflicted. (Including fee for service).
this is why you have to get out of the profession.
Can we as an Adviser group vote to sack Stephen Glendfield?
Glenfield is not fit for the job and nor is the board. They had one job. To introduce standards that put our profession on par with other professions. The blue prints are there. They could have taken bits and pieces from established professions. Instead they have introduced a set of poorly thought-out policies which go further than anything ever seen before, without consultation with practicing advisers. Can you believe that? FASEA’s own website confirms they only engaged with Licensees, industry bodies and consumer representatives. No engagement whatsoever with the very people to which the standards apply – financial planners. The idea behind FASEA was good. Many of us had high hopes. But they have failed miserably and they must be brought into-line. We cannot allow these people to hijack our profession and use FASEA as some sort of dick measuring competition. They think they are heroes because they have imposed the most harsh set of policies ever imposed on any profession. But what they are actually doing, is ruining the profession, making advice more expensive and difficult to obtain while allowing the most conflicted, substandard advice dished out by product floggers to flourish. This nonsense needs to end.
No wonder advisers are leaving..
No sh!t Sherlock! This is what we have all been saying for how long? It doesn’t matter how many warm and fluffy guidance’s are put out, in the real world the lawyers are going to get hold of it and screw over the Adviser once again. Honestly, how many ways can this industry get f@cked before they realise they need to start again and just keep it simple.
Do other professions have to suffer such ambiguity? If FASEA means one thing why do they say another in the standards? Is it so hard to say what they mean that they need so many guidance statements just to clarify? Financial advisers have to price in the risk of getting sued years later due to not understanding where they stand today.
Yes, academics for example. Everybody ignores rampant conflicts of interest until you get investigated …
I have said all along that FASEA’s and ASIC’s opinion on the Code is irrelevant. FASEA’s vague ramblings should in particular be ignored – their ‘words’ have zero regulatory effect. The only authority on the Code will be the Courts and AFCA, and they will interpret (and must interpret) according to their own (and likely full) intention.
That is highly optimistic. ASIC can shut you down. Yes, you can appeal but the damage will be severe.