FASEA’s released guidance to the code of ethics has recently been under fire, with the Association of Financial Advisers (AFA) calling it “way above the current law”, and the Financial Planning Association of Australia (FPA) saying the guidance raises more questions than it answers.
But in a speech at the FPA Congress in Melbourne yesterday, Mr Glenfield said the guidance is illustrative rather than conclusive regarding how advisers should apply the code.
“Those examples are not intended to provide definitive guidance. Rather they demonstrate by example how advisers can think through the efforts of an engagement with a client,” Mr Glenfield said.
“An important point to note is the guidance is not a compliance checklist. Ethical principles do not readily match a tick and flick compliance approach.
“Doing what is right will depend on the particular circumstances that requires advisers to exercise their professional judgement in the best interests of each of their clients.”
Code should be read ‘in totality’, says FASEA
Mr Glenfield said that, in implementing the code, it’s important that advisers don’t consider each of the standards of the code in isolation, as they are “intended to operate in combination for strength and inspiring good practice”.
“That’s an important point. A lot of the debate out there at the moment is concentrating on a particular standard and what does a particular standard mean,” he said.
“The way we’ve written the code should read it in totality. All of those standards interact and work together in delivering what the code of ethics is trying to achieve.”
Much of the focus on the FASEA code has centred around Standard 3 addressing adviser conflicts of interest. In particular, concerns were flagged in FASEA’s guidance on Standard 3 regarding other sources of ‘variable income’, which states:
“You will breach Standard 3 if a disinterested person, in possession of all the facts, might reasonably conclude that the form of variable income (e.g. brokerage fees, asset based fees or commissions) could induce an adviser to act in a manner inconsistent with the best interests of the client or the other provisions of the Code.”
In response, Mr Glenfield said the FASEA code does not seek to ban particular forms of remuneration, nor does it determine that particular forms of remuneration are always an actual conflict.
“The guidance that discloses the intent of the standard and notes that you will not breach Standard 3 merely by being a duly remunerated employee of an entity that lawfully provides retail financial advice and services provided that the provision of that advice and services are in the best interests of your client and comply with the other provisions of the code,” he said.
“FASEA will look to provide some positive examples involving a number of forms of income that demonstrate this in a practical way.”
Mr Glenfield also sought to allay adviser concerns around whether the FASEA code is seeking to regulate business structures and fee models of businesses.
“Simply, it can’t,” he said. “By law, the code only applies to relevant providers or individual advisers. It does not apply to the broader business that those advisers work for.”
I dont remember voting to become a profession #ioptout
In summing up Mr Glenfields comments – its the constitution, its Mabo, its justice, itss law, its the vibe…..
I call for a full public inquiry into FASEA.
I read this article this morning and still cannot believe what was stated. As all the comments below have reiterated the entire FASEA, Haynes etc is a shambles and must be stopped. The problem is it needs to get out to the broader public whilst it feels good to vent we are a “closed loop” and hence nothing gets out. We need an advocate for us out there pushing our message so we can be heard, actively campaigning not reactive.
Did this dude really just say it’s the feeling of the thing and we should stop overthinking it when it’s our lively hoods and our names that get dragged through the mud?…
I have always remained calm and collected and tried to be pragmatic and understanding of all changes but this is beyond me now… This needs to be brought down immediately… What kind of moron is he to say this when we LEGALLY have to follow it. Oh but don’t worry guys it’s just the feel of it… This is why FASEA don’t win in court they don’t understand what making law is about..
Can someone explain why the implementation of the code hasn’t been delayed to a point where everyone understands it (including the CEO of FASEA). I can just imagine the lawyers licking their lips for 1st of January.
Standard 3 says no conflicted remuneration. Fees, trails, commissions have already be classified as conflicted remuneration. The code says you can’t read this down. Waiving this off by saying ‘read the code in its entirety’ is like saying reading the corporations act in its entirety will water down its meaning! Standard 3 does not apply to salaried employees, like those you find in banks!! The banks that exclusively fund FASEA. They are going to send us the wall, I call BS on everything FASEA
Exactly what I’ve been trying to say to them for months, and nothing changes
Exactly. Glenfield is trying to pull the wool over our eyes and sadly some advisers are buying this nonsense. I talked to a senior FPA figure at the conference yesterday, who told me ‘don’t worry about standard 3, a board member of FASEA has told me life insurance commissions and asset-based fees will be fine, there is nothing to worry about’. Yeah right, try telling this to ASIC. They will look at exactly what is written in the code and the guidance, and both say, as clear as day, they are banned on 1 Jan. Licensees will systematically breach if they pass all this revenue through to self-employed advisers from 1 Jan. Does anyone seriously think ASIC won’t take up the opportunity to prosecute systemic breaches? They now have a ‘why not litigate’ policy. We are screwed.
Mr Glenfield said the guidance is illustrative rather than conclusive regarding how advisers should apply the code.
“Those examples are not intended to provide definitive guidance.”
[b]Isn’t that just awesome FARSEA – The Guide you have when it’s NOT A GUIDE !!!!!!!!!!11[/b][b][/b]
The FARSEA MUPPET show just keeps rolling from disaster to disaster.
The major issue here is the term ,” might REASONABLY conclude.”
It is entirely subjective and open ended.
It is a license to accuse an adviser of not acting in the best interest of the client .
The lawyers will have a field day as they will effectively encourage their client to ” reasonably conclude ” the advice was not in their best interest and that an incentive was sought by the adviser to provide that advice.
It is the killing season for advisers as they will be totally exposed to attack.
By Glenfield continuously stating that the Code must be read in totality and that just because it reads that way doesn’t mean it will be interpreted that way, is an utter insult.
Forget the guidance note – the thing we need to follow is the Code & it says you cant advise or act if you have a conflict. All the explanations in the world do not get you around that. The Code must be changed!
Exactly. The Code itself does not differentiate between types of conflict, and whether or not that conflict is managed in way that the client is not disadvantaged. Fee for service creates a conflict. If advisers were to follow the Code as it currently stands, no-one could charge fee for service.
So in reality “it’s the vibe, it’s Mabo”
how these muppets were let loose to write this stuff is a mystery to me.
and frankly the Code clearly trumps the law in its intent.
FASEA is the biggest load of rubbish that I have ever heard. I have been a practising accountant for 48 years and a financial planner since 1988. The amount of study required is absolutely ridiculous and The FPA, and all the other organisations including the accounting bodies know that the FASEA has gone too far.
The same thing happened with the accounting profession in 2011 with APES 230 until common sense prevailed and commercial reality was taken into account. Why is it that advisers are now being held to a higher standard than accountants or lawyers who only have to manage conflicts not avoid them? Weren’t advisers being brought up to the same ethical standards as lawyers and accountants? This code clearly exceeds what lawyers and accountants need to do, why?
Whilst being preached to by FASEA as an industry, what experience or qualification in Financial Planning do these “senior” persons have? It seems as though it is zero, yet they are steering a whole industry into oblivion?
Oh Dear. God help the Financial Planning profession.
Clearly written by out of touch academics with no real world experience.
I think when FASEA chose to ignore the suggestions made by ASIC (that some of the code conflicts with existing laws) that was the beginning of the end for them. This will now unravel pretty quickly.
Also with Amelia Constantinidis as Standards Director at FASEA they were always doomed;
– No FP qualifications whatsoever. Holds a BSc in Computing Science
– No advice experience at all
– Ex AMP 2002 to 2016 (including as Director at Horizons)
– Not even eligible to sit the FASEA exam herself
of course he is going to defend it. The minute he acknowledges what we all now and it is unworkable, the nail will be hammered into the FASEA coffin
Pot kettle Glenfield. Simple as that and what a hypocrite.
I cannot believe you spruke to the industry about the virtues of conflicted remuneration when you’re running an organisation that receives all its (enormous) funding from 8 banks / financial institutions who all want non-aligned advisers out of the industry. So you gear your Code of Ethics and future education requirements so those very banks and institutions can come in an clean up when the current regulations are repealed sometime in the future after everyone realises they’ve completely decimated the industry, there are no advisers left to help Australian consumers with their financial or insurance advice and Australia’s massive underinsurance has only skyrocketed.
If you want to understand what conflicted remuneration is, there should simply be the word ‘FASEA’ shown in any dictionary for it. What a joke.
Yet the code specifically says “Unless this Code expressly says otherwise, do not read down any of the provisions of this Code by reference to any other provision of this Code.”
The point Glenfield is missing is that advisers are sh#t scared of how the FASEA Code’s “illustrative” guidance will be misused as an adviser persecution weapon by some people in ASIC, AFCA and the Courts. There are too many hard core zealots in those environments who have shown they are more focused on indiscriminate revenge fuelled persecution of financial advisers, than genuine consumer protection. And it could get even worse with the new disciplinary body, if the government gives extremists from fake “consumer associations” like Choice and CALC any representation on it.
If Glenfield thinks the Code will only ever be enforced by reasonable professionals acting with common sense, he is deluded. He needs to remove any scope for the Code to be inappropriately used as a weapon by the hate brigade.
So in 12 months when many self employed planners are bankrupt we will see how the code is going and how it is affecting the banks and ifs.
FASEA code is the door through which the lawyers will flood….!
Glenfield is either deluded, or hamstrung by a recalcitrant board with no understanding of the real world or the regulatory environment in which we operate. Either way, his position is completely untenable and he needs to stand down. The FASEA code is a complete and utter farce.
So companies are fine to do what they please and they will not break the law….. just the planners who are employed by them and companies we don’t like we will go after and ban them with a code that is so broad they can’t defend themselves ….
As clear as mud.
I heard the guidance was written by a bloke called John Bacon. Remember John Bacon? The ex head of professional standards at the FPA who thought it was okay as the prosecution to tak directly with the defendant Sam Henderson and whom Rowena Orr exposed. He also authored the FPA Ongoing Fees Code that was taken up by “7 members”. Before the FPA he was in charge of standards at CBA. I guess in defence of FASEA’s choice of recruit, Eddie Obeid wasn’t available.
That explains a lot. I remember John Bacon giving a presentation on the FPA’s Ongoing Fees Code. It was supposed to give advisers who subscribed to it relief from compliance with the FDS and Renewal Notice requirements. But Bacon’s FPA Ongoing Fees Code was so ridiculously complex and laborious, it made the FDS and Renewal Notice requirements look simple by comparison! No surprise only 7 members took it up.