Earlier this month FASEA put three proposals up for consultation ahead of amending the wording of the contentious Standard 3 of its Code of Ethics, and now the Stockbrokers and Financial Advisers Association has come out in support of option 1, while demanding urgent tweaks.
In a statement issued on Monday (29 November), the SAFAA said that it wants to see FASEA adopt its own wording describing the intent of the standard, rather than the convoluted wording it has put forward.
“The current wording of Standard 3 prohibiting a financial adviser from advising, referring or acting in any other manner where they have a conflict of interest or duty is unworkable in practice, particularly in light of the lack of a test of materiality or proportionality,” said Judith Fox, SAFAA chief executive.
“The correct legal and ethical position is that it is only when a client’s interests cannot be prioritised that the conflict must be avoided.’’
According to Ms Fox, while FASEA captured the “correct approach” in its own wording used in the intent to the Standard – which says “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” – it did not replicate this in option 1.
“We welcome FASEA putting forward an option that clarifies that a conflict of interest only exists when the adviser acts in a manner contrary to the client’s best interests,” said Ms Fox.
“We support Option 1. But we query why the proposed wording needs to be more complex and less accessible than FASEA’s intent.”
Ms Fox stressed the urgency to ensure the Standard is as “clear and concise as possible”.
“We urge FASEA to provide less complex wording by using its own language in the intent.”
“This issue has greater urgency as a result of the introduction of the Single Disciplinary Body on 1 January 2022.’’
Under the Act introducing the single disciplinary body, FASEA will be wound up on 31 December 2021 and its standards-setting function transferred to the minister.
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 to FASEA’s three options can be submitted through FASEA’s dedicated consultations email at consultation@fasea.gov.au until 1 December 2021.
FASEA was a joke, but the resulting Code of ethics for our profession turned out pretty well. Take out al the BS and just adhere to the 12 standards and understand and work in alignment with the underlying principals too and we cant go far wrong.
Only one month until FASEA is gone. What a disgrace that board was. Shame on them. FASEA should have been a beacon of light for our profession, raising standards and taking us into a brighter future. Instead, the board was greedy, self-rightious and conflicted. They put their own selfish needs ahead of consumers, and now the public are paying for their incompetence through higher fees and an ever shrinking pool of advisers, most of whom can no longer accept new clients unless they are rich. Those on the board should never again be trusted in a publicly appointed position of power. They have proven themselves to be incapable of decency, ethical behaviour and moral standards.
Great call Giggity! you’ve certainly addressed it all!
Why don’t we get some University Financial Planning academics who also work for large dealer groups and formerly sat on the FASEA Board to put in a submission or two.
I’m sure they would be free of all conflicts – real or perceived.
ASIC would pay them right?