In its submission to the authority around its latest code of ethics guidance, the Stockbrokers and Financial Advisers Association (SAFAA) suggested FASEA needed to “abide by section 17 of the Legislative Instruments Act, which sets out the key preconditions before a legislative instrument can be made and registered in Parliament, and ensure that any proposed changes to the code are subject to public consultation”.
Section 17 of the act states that “before a rule-maker makes a legislative instrument, and particularly where the proposed instrument is likely to … have a direct, or a substantial indirect, effect on business … the rule-maker must be satisfied that any consultation that is considered by the rule-maker to be appropriate and that is reasonably practicable to undertake, has been undertaken”.
When defining an “appropriate” consultation, the act goes on to say that “the rule-maker may have regard to … the extent to which the consultation drew on the knowledge of persons having expertise in fields relevant to the proposed instrument; and ensured that persons likely to be affected by the proposed instrument had an adequate opportunity to comment on its proposed content”.
The comments follow the continued rejection of the wording of Standard 3 – which was updated in a later draft of the code of ethics to state that advisers “advise, refer or act in any other manner if you have a conflict of interest or duty” – by legal experts and major industry associations.
The original wording of Standard 3 in a late 2018 draft of the code stated that “you must not advise, refer or act in any other manner if you would derive inappropriate personal advantage from doing so”.
SAFAA stated that “this significant amendment to Standard 3 was undertaken without consultation and the Standard remains unworkable in practice, particularly in light of the lack of a test of materiality or proportionality”.
The association suggested that wording around the client’s best interests be added to the standard, to provide context through which any conflicts of interest could be assessed in legal disputes.
“The code should utilise the wording of the intent of Standard 3, so that the standard states: ‘advisers must not advise, refer or act in any other manner where they have a conflict of interest or duty that is contrary to the client’s best interests’,” SAFAA said.
SAFAA is spot on. The wording of Standard 3 should be changed to reflect the clear intent of the legislators. This would be much clearer and simpler for everyone, without eroding consumer protections in any way.
Why hasn’t this happened? Because FASEA has been hijacked by political activists who are trying to use the Code to subvert the intent of existing laws.
I think time to write them from scratch once the single disciplinary body is in.
Let FASEA stick to just finishing these terrible exams and education standards and then get rid of FASEA.
They were useless from the start with very poor communication and honestly quite a lazy group.
There is continued and genuine opposition to the processes that FASEA have employed.
The relationships and communications between ASIC, CHOICE, CALC , Griffith University academics and FASEA has now become the topic of significant interest and concern in relation to the process that has delivered the current unworkable Code of Ethics.
There is significant suspicion that potential collusion and influence has taken place in order to drive an intended outcome based on ideology and bias rather than the real world benefit and positive impact delivered to the consumer and the advice industry in combination.
I doubt it was collusion. There was revenge in the air at the time and the code reflects that origin – in the nicest possible way but still revenge.
They were told to write a code of ethics that put advisers in their place – a last chance for delinquents, and a code that had to allow vertical integration at the same time. That is simply not possible. It would be unthinkable in law and accounting.
I hope one day this mess is behind us and we can focus on providing advice
That is drawing a seriously long bow.
Stephen Glenfield, get off IFA website, surely you have seen enough terrible Adviser comments, articles and ALL Adviser associations against FARSEA.
Either fix it or better still depart.
so that would mean they are behaving unethically?
It’s pretty simple. Someone in authority needs to take control – presumably Hume. Do something !
MIA Jane? Unlikely.
Wilson or Falinski need to be given her job. MIA Jane has had plenty of opportunity, and although she hasn’t done as much harm as O’Dwyer, she hasn’t done enough good to stay in a role that’s supposed to be about improving the country.
Aren’t the LIBs just wonderful to IFAs.
Over Bloody Complicated, Wrecking Ball ODywer.
And MIA what can I do Jane.
Seriously WTF
Don’t worry…we will remember all the broken promises as we remove the knives from our backs at election time…