In its submission to the authority around its latest code of ethics guidance, the association suggested the wording of Standard 3 needed to change to reflect the actual application of the standard, suggesting guidelines would not be enough for licensees and advisers to have legal confidence around meeting the code’s requirements.
“We continue to believe the strict wording of the standards and the more nuanced wording of the intent and guidance are not compatible,” the SMSFA said.
“In our opinion, the code would be improved if many of the standards were amended to reflect the ‘intent’, for example, in Standard 3, referencing the ‘client’s best interests’. The SMSF Association has previously submitted Standard 3 should be revised to reflect that intent.
“Until such a process is complete, industry will continue to refer to the written code as determinative.”
The association also pointed out that while the latest guidance had confirmed that FASEA was supportive of scaled advice, it had left advisers in the dark as to how such advice could practically be provided without breaching the code, particularly the standards that related to taking account of a client’s broader, long-term individual circumstances.
“The way Standards 2, 5 and 6 apply practically for advisers acting under a scoped authorisation or a limited AFS licence remains unclear,” the SMSFA said.
“Specifically, members have raised concerns when they are engaged for SMSF advice but the code requires consideration of broader requirements and therefore they cannot act in a limited advice scope.
“These considerations are amplified when the code requires a sufficient broad long-term interest based fact find that is more comprehensive than the consumer requests. This decreases the affordability and efficiency of the advice and documentation.”
The association called on the authority to release further specific guidance on how scaled advice that complied with the FASEA code could be achieved, and suggested the authority draw on ASIC’s work in its forthcoming unmet advice needs project.
A large part of this problem has been caused by people making decisions whom have little understanding of the process of advice or have never been involved in providing advice and the decisions made will significantly impact the security of advisers livelihoods and the security of their reputations as the likelihood of inadvertent breach is high.
The level of anxiety that advisers have experienced in the last 5 years has been nothing short of appalling and the over obsessive focus on remuneration types, styles,amounts and reporting such in duplicate over and over in case the client doesn’t fully understand what they are paying for after receiving 6 different types of notification is bordering on discrimination of an industry.
To say that financial services have been ” bullied ” to breaking point is not an understatement.
And what has this achieved??………..increased cost to the consumer and an exodus of good quality advisers who have made a decision that they simply don’t want to or cant take it anymore.
Well done to those who think they know what is is best for all.
Good summary, though I expect the self appointed “experts” who have made this mess will take zero responsibility (but will have been paid regardless of outcome).
It seems it’s only unworkable for advisers and stockbrokers that are getting some type of discount due to a relationship with a product manufacturer, or negotiated a discount on platform fees due to FUM. We may as well go back to 1998 and argue for a standard 0.6% commissions.
What a ridiculous comment! Listen to Phil Anderson talk at length about the issues with Standard 3. If I recommend superfund XYZ and I am also in superfund XYZ is could be interpreted as a conflict of interest, even though my clients would take great comfort in the fact my super is invested in the same way as my clients. Phil Anderson rightfully argues that under a strict interpretation of Standard 3 all advisers should not be invested in anything and should have all of their money under the mattress (and even that may cause a conflict of interest). You cannot get rid of conflicts of interest, they can only be managed
these are just ridiculous examples…. your example and example stating getting paid for work is conflicted…what scaremongering by groups or advisers, that have a symbiotic relationship with a product. Too many advisers living in the past and too many living off products, putting clients and their industry last. As I said it looks quite workable from my perspective.
While the intrafund carveout on bonus payments made to intrafund personal advisers (marketing reps) remains, the FASEA Code of Ethics remains a worthless document.
Standard 3’s wording is very clear and simple but unworkable as all forms of payment would fail it – they all may modify the behaviour of the payee and they only *may* need to in order to fail the standard. The guidelines are unworkable as they are not law – the code and the explanatory memorandum are. We have seen this with FoFA and the way ASIC interpreted FoFA after the Royal Commission.
The SMSFA is right.
FARSEAcals continued tin ear arrogance is beyond a joke and clear they have no idea of the Real World and have no interest in an ongoing Real Adviser world.
FARSEA fail everyone of their own Values and Standards. Highly non disclosed conflicted board and corrupt ASIC biased Agenda.