The Financial Adviser Standards and Ethics Authority’s (FASEA) proposal in its code of ethics for advisers to proactively hold each other to account is akin to whistleblowing, according to wealthdigital.
Wealthdigital technical manager Rob Lavery said FASEA’s proposed clauses in its code of ethics are as wide-reaching as those applied to any profession in Australia.
“The requirement for advisers to proactively hold each other accountable may well amount to an enforceable whistleblower obligation,” Lavery said.
Commenting on FASEA’s recent raft of consultation papers on the new education and professional standards, including those on continuing professional development (CPD), the professional year and foreign qualification, he said some central themes were becoming clear.
“First and foremost, it is evident that FASEA does not see the way industry regulation currently works as the basis for its new approach. FASEA’s consultation paper on CPD does not look to build on the specialist areas model used in ASIC’s (Australian Securities and Investments Commission) RG 146. Instead, four key areas are identified with a heavy focus on ethics and regulatory compliance,” he noted.
“This fresh approach was also present in FASEA’s paper on qualification pathways for existing advisers.
“FASEA’s paper all but ruled out the participation of education providers in the vocational sector. This stands in contrast to the prominent role the vocational sector has played in providing qualifications to financial advisers up until now.”
He also noted FASEA’s consultations indicate professional bodies will play a smaller role in formally promoting and monitoring professional behaviour.
The fact they currently create structure around CPD and assess CPD content and provide accreditation was not reflected in FASEA’s consultation paper, he said.
“Furthermore, in May ASIC released a consultation paper on its oversight of applicants to become a monitoring body of FASEA’s new code of ethics,” he said.
“The paper did not explicitly rule out professional bodies becoming monitoring bodies, but it did establish challenging requirements around managing conflicts of interest, adequate resourcing and proactively monitoring advisers’ activities.”
In addition, he pointed out FASEA had a tendency to propose standards that are as high as any comparable profession.
The proposal for a required 50 hours of CPD a year is equivalent to engineers and doctors and exceeds other professions such as accountants, mortgage brokers, nurses, and teachers and lawyers in New South Wales.
“Ultimately, the reforms FASEA are consulting on are enshrined in law,” Lavery said.
“Requirements like degree qualifications, the adviser exam and the new code of ethics can only be removed or reduced by subsequent legislation. What can be shaped is the way FASEA enforces these requirements, so it is important to be active in the consultation process.”
