The new ethical standards released by the Financial Adviser Standards and Ethics Authority (FASEA) trump any obligations to licensees for financial advisers, according to Deloitte ethics and professionalism partner Dr Deen Sanders.
Speaking at the SMSF Association National Conference 2019 in Melbourne today, Sanders said the implications of the FASEA code of ethics were significant and the advice sector had to set the direction for the application of the code.
Addressing the issue of personal ethical behaviour compared to meeting licensee obligations, he said the ethics requirements of FASEA were larger than the law reform issues that will flow from the recommendations of the banking royal commission.
He said the new industry-wide code of ethics from FASEA empowered advisers to place themselves in a different relationship with their client and their licensee than had historically been the case.
“According to this law and this set of expectations, the relationship that you have with the client is paramount and supersedes your relationship to your licensee,” he said.
“It overrides your authorisation obligations and shifts your duty wholly to the client,” he said, adding many advisers may already believe this but the law has not said the same.
“The law has historically put advisers in a position of being subject to authorisation arrangements and they now have a duty that sits aside from that … and will open up conversations as to who do they owe a duty as an adviser.”
He also noted the advice sector had yet to hold deep conversations about where their responsibilities would lie and risked having them decided by non-advisory third parties.
“Until we have those conversations, we are leaving it to the legal fraternity to determine and the courts to decide,” he said.
“We should be having a conversation as a professional community about what we believe to be right and how we apply the code of ethics.
“I encourage you also not to leave it to code-monitoring bodies to decide. Do not let somebody else determine what your ethical expectations are. They are written now and we need to populate them as a professional community by talking about and debating them.”