Facing questioning from the House standing committee on economics around the late release of code of ethics guidance documents by the authority, FASEA chief executive Stephen Glenfield said the documents had been released following adviser confusion around how to apply the code to real-world scenarios.
“In our meetings with stakeholders over time, it was clear people sought additional guidance, so we released what was essentially a series of examples to help advisers understand how to apply the code to further scenarios,” Mr Glenfield said.
“We released further guidance in December and we continue to talk with stakeholders on the code where we see a need to help advisers understand the code and exercise their professional judgement in putting it into play.”
Mr Glenfield said decisions on how to apply the code were often going to amount to a judgement call from advisers, rather than being able to seek definitive advice from compliance staff on what would constitute a breach.
“It’s a behavioural rather than a traditional compliance document, so the guidance we are giving is helping people try to understand how they apply their professional judgement to the code,” he said.
Responding to broader questioning around the lack of assistance provided to advisers to comply with the FASEA standards, Mr Glenfield said the authority had attempted to balance its legislative obligations under the Corporations Act with the difficulties the industry faced in dealing with “significant change”.
“In terms of what we have done to help advisers – if we look at each of the standards, for example the exam, we put out practice questions, a guide to what to read, videos on how the exam will look on the day and what the exam room will operate like. We’ve provided guidance as much as we can to prepare people,” he said.
“In terms of the requirements for consultation under the Corporations Act, the range of people we are required to consult with includes industry associations, regulators, consumer groups and licensees who represent their advisers.
“We take numerous inquiries from individuals, which we do answer, and in the last 12 months we have dealt with more than 6,000 individual adviser inquiries.
“At the end of the day these changes were brought in based on an inquiry that reached the conclusion that standards need to be raised, and it’s always going to cause difficulty in change, but we are trying to balance that as best we can.”
FARCEA!!!!!!!!
I’ll be sure to have Denis Denuto represent me in front of AFCA, to present his “its the the vibe” defence….. what a mess this is!
FASEA is doing nothing to improve the quality of advice, nor the professionalism, nor the outcome for clients. Degrees in Financial Services from universities or the likes of Kaplan don’t add value to such things either. In the field training, experience and mentoring does, along with supervision from a regulator who is basing decisions on logical ground rules/legislation. Not the antiquated illogical rubbish they rely on currently.
The Corporations Act is what needs to be updated. It’s outdated, especially compared to the rest of the world’s financial markets and their requirements on Advisory/Product providers, and is the cause of ASIC’s overbearing, inefficient, illogical attitude towards Advice and Advisers. Clients don’t want advice in the way it’s being provided – not the ones who’ve experienced it in more efficient and user friendly ways at least.
The laughter coming from people who decided to get out can be heard for miles. I mean seriously if it wasn’t so serious this would be an absolute a crack up.
Absolute joke
These guys have created an exam based on their interpretation of practical application of ethics within financial services And expect advisers to practically apply this in their day to day business
There is a huge gap in learning between theory and practical application of ethics in the workplace so to give advisers an exam that doesn’t even cover off the basics is Bordering on incompetence
The sooner these clowns are gone and replaced by a qualification that REALLY educates advisers on the application of ethics the better
SNAFU – Situation Normal All F***** Up
They want us to use ‘professional judgement’. Then mark us incorrect in FASEA exam.
Sumting wong ???
INDEED! Patently ridiculous! What on earth is wrong with FARCE-IA?!
It’s the FARSEA “vibe” yet again.
i.e. FARSEA have NO idea how their rules actually work In the real world and try to fob off the many real concerns with this BS generalisation Vibe Statements.
Sorry FARSEA, AFCA will apply the black letter law and Kill advisers in the wrong.
Absolute Canberra bubble bureaucratic BS that is not workable in the real world.
FARSEA Off !!!!
If FARSE was doing their best and indeed interested in raising the standard of the industry, they would post the answers to each round of exam questions and be prepared to be flexible on accepting multiple correct answers because questions were badly worded.
Oh I’m hearing you!!!!!!
Part of the reason why compliance managers (like me), find interpretation and implementation of the standards difficult (notwithstanding the exiguous and unhelpful guidance produced by FASEA) is that, unlike other professions operating under limited liability schemes, advisers don’t have the luxury of just using their “professional judgement”. We work in a very regulated and very prescriptive environment. We have obligations under the Corporations Act and regs and we’re answerable to the regulators, PI insurers, AFCA, the courts, the professional associations and even product providers (who are increasingly setting themselves up as quasi-regulators as they transfer the risk and cost of their post REP499 and post-Royal Commission fee for no service reparation debacle to licensees and advisers). Aspirationally, it sounds good, but ultimately, we can’t have an environment of professional best judgment until the obligations under Chapter 7 and the regulations in place that govern the advice process more closely align with the intent of the standards (and all stakeholders are on the same page).
Beautifully summarised. Thankyou.
I don’t think there is too much resistance to change, that is just a cop-out. The whole Exam structure and intent is flawed. Too many Intellectuals at the helm, with ASIC the back seat drivers
The problem is FASEA is designed by consumers. Decades of selling products or being licensed by a product manufacturer trying to be wiped clean overnight. I can see it would be a challenge for many advisers to put the best interests of their clients first. Churning, BOLR, cheap licensing fees because their subsidized by an insto, all can taint an advisers perspective. Look at your industry associations, bulk membership fees, in bed with insto’s and working with them. The whole industry is structurally flawed and so no wonder it’s so over regulated and ASIC wants advice to be provided by the local Accountant.
Oh Really ? So there are real clients in real client relationships involved ? I doubt that very much. It is designed by cynics. Oscar Wylde defined a cynic as someone who sees the price of everything and the value of nothing. They have no interest in how small business works they just want everything for nothing. The reality is they will never be clients as advisers avoid cynics like the plague. They want everyone to reform to their agenda. Won’t happen.
Email this to Jane Hume…this is not making advice affordable for all as she constantly cites!!
The shambles that is FASEA just drifts that little bit lower.
So according to this a judgement call sounds like a highway with a posted speed limit between 100 and 110km/h.
If you go over 100km/h then you may be in the wrong if a disinterested person, in possession of all the facts, might reasonably conclude that you are speeding!
I was on my bicycle officer….it only goes 40km/h….
HAHA. In addition, if the limit was previously 80km/h and any time in the last 12 years you drove that road at 110km/h it is now deemed you have broken the speed limit. (In the same context as look back audits)
Bloody field day for AFCA and lawyers. That’s all we will achieve
How about this for a novel idea? Couch the Standards in unambiguous language and obviate the need for examples which, IMO, only confuse the issue further.
If thats the “best you can (do)…then you (Glenfield) seriously need to step aside and let someone more competent take over….
Yet we are asked for definitive (Black and White) answers in the FASEA exam.
so rather than make the rules clear and concise, leave it up to interpretation and hope like hell you’re not dudded by the system
Its very simple. With FASEA, whatever the client thinks is in their best interest, is what is their best interest. Advice is simply an after thought now. Just ridiculous.
In addition, 5 years later the client’s Lawyer will tell them what is in their best interest now and what was not in their best interests then.
The client will be convinced they have been wronged because their Lawyer will manipulate the coercion in a bid to generate significant fees.
The Lawyer will massage their client’s emotion and create a case.
Yep, I know it’s a difficult concept to grasp Animal Farm but what a client thinks actually matters and if they think you haven’t acted in their best interest, then you haven’t. Hang on, it’s not that difficult to understand after all. Perception is reality so take your legal goggles off and focus on your clients rather than ticking boxes.