The Financial Planning Association (FPA) and Association of Financial Advisers (AFA) have criticised the Financial Adviser Standards and Ethics Authority (FASEA) over its disregard for industry input into its new code of ethics, following last week’s release of the body’s code of ethics guidance.
The FPA also pointed to FASEA’s lack of interest in helping financial planners understand the new code of ethics in the lead-up to its implementation on 1 January 2020, despite repeated calls for guidance from the financial planning body since the code’s release eight months ago.
“With less than 50 business days before the code is due to come into effect, FASEA has completely failed both in their obligation to consult and to provide clear guidance on how its standards will work in practice,” FPA chief executive Dante De Gori said.
“The process has again been greatly disappointing and completely inadequate, which has produced guidance that is confusing, out of touch and at odds with existing financial planning laws and standards.”
He noted the FASEA board of directors’ failure to consult with financial planning professional bodies was an indication the authority was “more interested in academic theory than making a genuine effort to improve standards in the financial planning profession for the benefit of consumers”.
In addition, he said the code clashed with the federal government’s royal commission road map and the grandfathered commissions legislation recently passed by parliament.
“Financial planners and even the public are confused about which standards should be followed – those in the code of ethics set by FASEA or those in corporations law set by the Australian parliament,” he added.
Earlier this week, AFA voiced its concerns regarding the new code, highlighting FASEA’s zero-tolerance approach to conflicts of interest as a major issue.
“This is tantamount to FASEA creating its own laws, way above the current law,” the AFA said.
“We simply do not understand how it is possible, when the Corporations Act only requires conflicts to be managed, and the law specifically permits life insurance commissions and other conflicted arrangements, that FASEA could issue a code of ethics that is binding on all financial advisers that appears to completely ban conflicts of interest.”
Following the adviser bodies’ comments, FASEA today said it would commence a one-month consultation period with “designated representatives of consumer, professional, education and other industry groups”, with the first session to be held on 12 November.
“The purpose of these sessions is to provide opportunity for consultation on the practical elements of the code and to communicate and explain the integrated nature of the code,” it said.
