Based on feedback received on Standard 3 during the consultation process conducted on its code of ethics, FASEA said on Wednesday (3 November) it is considering amending the wording of the contentious standard to align it to its intent.
“The code of ethics provides an ethical framework of values and standards to assist advisers in exercising their professional judgement in the best interests of their clients,” FASEA chief executive Stephen Glenfield said.
“FASEA understands that some stakeholders have raised concerns regarding the wording of Standard 3 and welcomes stakeholder feedback on proposed options to align the wording of the standard with the intent of the standard.”
The options FASEA is consulting on include:
In June, FASEA revealed it has received 37 submissions to its code of ethics guidance, a majority of which had pointed to the urgent need to refine the wording of Standard 3.
“Standard 3 received particular comment with a broad range of suggestions made including [to] retain the standard as is, incorporate the wording and intent from the draft guide into the standard to give it legal application, incorporate a reasonable person and materiality test into the standard, revert to the original wording of the standard re inappropriate advantage, [or] change the standard to provide for a disclose and manage approach,” FASEA said at the time.
All feedback and submissions can be submitted through FASEA’s dedicated consultations email consultation@fasea.gov.au until 1 December 2021.
Conflicts of interest need to be managed as per the existing law. This is what the Code of Ethics should reflect.
We have wasted so much time and energy because people that made up these rules don’t understand the environment in which they would operate. Mind boggling.
Option 3 is preferred. Just retain the existing option and change licensees and pay full commercial terms. Move away from the product and provide advice. Charging a fee is not a conflict either.
Wrong. Wrong. Wrong. Charging a fee is a conflict. All forms of remuneration are a conflict. That is why Standard 3 is unworkable. The Corps Act acknowledges that fee for service is conflicted remuneration by providing a specific legislated exemption for it. Just as it does with certain forms of insurance commission. But there is no equivalent exemption for these forms of remuneration in the FASEA Code.
The current wording of Standard 3 effectively precludes all forms of remuneration. Yes, we can all argue that’s not its intent. But that’s the whole problem. The wording doesn’t reflect the intent. In the hands of a biased zealot at AFCA or ASIC, the intent becomes irrelevant. Standard 3 becomes a weapon they can use in their indiscriminate persecution campaign.
Here is how it will play out. They ask for feedback from “stakeholders”. They will receive alot of submissions from financial planners, which they will ignore, in preference for the ASIC funded submission from Choice or a university employee. They will refuse to release any of the submissions stating privacy. The new Standard 3 will be announced and will remain unworkable. FASEA/Treasury will then lie and say we asked for feedback and responded to what they received. No client will be left better off. Sound familiar?
Spot on
Another corrupt FARSEAcal show from these highly Unethical Govt administrators
If we accept Option 1 (which I think is common sense) then we are simply circling back to the rule BEFORE FASEA even existed. Begging the question: what was the point of all this?
Fair question Brett. I think one of the main aims of the FASEA Code is to cover things that aren’t specifically covered in the Corps Act. However conflicts are now quite thoroughly covered in the Corps Act through Best Interest Duty and conflicted remuneration rules. Standard 3 may well be superfluous now.
Under Option 2 it’s defective already. Its states “expected to influence the [i]service[/i][b][/b] you provide” ASIC in their fee for no service report has created/implied a new term, which I refer to in my one page fee agreements as a “Financial Service” which ASIC have implied is distinct from a “general client services” . A Financial Service is defined by ASIC as a SOA or ROA. and in order to charge a fee, their needs to be an Advice document on file (sell bhp buy Rio) . Let’s remember 90% of what we do is not a Service according to ASIC, going to a hospital or Centrelink to help with a form,admin issues with product, cashflow etc etc are not a “Service” as ASIC have defined what customer service is all about. No “buy Magellan sell XYZ” no service delierved. Advice document hand the money back. So that definition of Service needs to be clarified by FASEA as it conflicts with ASIC.
Option 2 – obviously!
No, Option 1 because it aligns with other professions like accounting where they can receive a benefit if it does not cause them to act in a way that is not in the best interest of the client.
Wow – I am not sure that FASEA know what on earth they are doing, why they are doing it nor how to do it.
Apart from that, I have complete confidence in them.
Under Option 2, how does that reconcile with complying with your ASFL holder’s and/or employer’s standards and APL, both of which undoubtedly influence the manner in which you deliver advice to a client? The formulation, as worded, arguably prevents any advice from being given in all circumstances.
Public servants – no experience always set up to be done incorrectly
Option 2 seems to be more closely aligned with what every other profession has.
Option 1 is an admission that Option 3 is nonsense – or that we have been lied to all along, and they are trying to cover themselves. (Why wouldn’t Option 3 already say what they intended?)
Either way, it is proof that FASEA is incompetent.
Not necessarily proof of incompetence. It may be proof of conniving duplicity.
Standard 3 as it currently stands gives biased regulators further ammunition to persecute advisers simply for being paid for their service. ALL remuneration is conflicted, including fee for service. That’s why the Corps Act has a specific carve out of fee for service from the conflicted remuneration provisions. FASEA Standard 3 allows regulators to ignore the Corps Act carve outs, and persecute advisers for being paid by any method.
‘Standard 3 received particular comment with a broad range of suggestions made including [to] retain the standard as is’ – what a load of rubbish!! Not one person with half a brain in the industry would have said retain the standard as is. Pull the other one FASEA, it has bells on!!
…to align it to its intent…? So does that mean the current intent is designed to achieve a different outcome than that which was intended?
So the current intent is different to the actual intent…sounds like what we advisers have been saying all along.