AFCA outlines approach to FASEA code

The Australian Financial Complaints Authority has revealed how it will assess adviser conduct obligations under the Financial Adviser Standards and Ethics Authority’s code of ethics.

The new code will come into effect from 1 January 2020 and will be overseen by a single disciplinary body that is yet to be announced by the government.

AFCA said it will assess adviser conduct by giving the code its practical meaning, taking into account:

  • the intention and objectives of the code as a whole and the professional standards framework from which it is derived;
  • the current legislative, regulatory and professional environment within which the code operates;
  • the FASEA guidance on the operation of the code’s values and standards; and
  • ASIC’s expectations about steps licensees should take to ensure their advisers comply with the code and specifically the guidance that they will take a facilitated compliance approach with respect to standards 3 and 7 while FASEA continues to refine its guidance over the period up to the establishment of the single disciplinary body.

Speaking at the FPA Congress last week, AFCA deputy chief ombudsman Dr June Smith announced the approach that the ombudsman scheme will adopt. 

“Until the establishment of the single disciplinary body to monitor and enforce the code, AFCA will take a measured and considered approach to interpreting the code’s provisions,” Dr Smith said.

“AFCA will only assess adviser conduct against the code where a complaint and the conduct has occurred after 1 January 2020.”

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Dr Smith said the code attempts to improve adviser conduct and ensure they place their clients’ interests first and that they act in a way that is consistent with the values and standards expected of a member of a profession. 

“Fairness underpins everything we do at AFCA. In assessing what is a fair resolution of any complaint, AFCA will assess whether the financial firm and its adviser have reasonably met that standard, being mindful that the interpretation of the standard is still being refined via consultation and ongoing rounds of guidance,” Dr Smith said.

“AFCA will continue to use its panel of financial advisers and consumer advocates to assist it in assessing whether financial advisers have met the standards of conduct expected of them by the community and under the code.”

The FPA showed its support for AFCA’s approach, with chief executive Dante De Gori saying AFCA has made it clear it will take a measured and considered approach to interpreting the code’s provisions until the establishment of the single disciplinary body to monitor and enforce the code.

“The FPA fully supports the aim of the code, which will be to improve conduct and ensure all financial planners place their clients’ interests first, and that they act in a way that is consistent with the values and standards expected of our profession,” Mr De Gori said.

“Today’s announcement, along with ASIC’s confirmation earlier in the week on their facilitated compliance approach to standard 3 and 7, provides the much-needed breathing space for financial planners to calmly work through the remaining areas of uncertainty with FASEA over 2020.”

AFCA outlines approach to FASEA code
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Adrian Flores

Adrian Flores

Adrian Flores is a features editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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