The Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) have both endorsed the enforcement approach of the Australian Securities and Investments Commission’s (ASIC) announced yesterday with regard to the industry wide Code of Ethics the Financial Advisers Standards and Ethics Authority (FASEA) introduced earlier this year.
Specifically, both bodies were welcoming of the facilitative approach ASIC has adopted concerning compliance with Standards 3 and 7 of the new code.
“It is important to note that facilitative compliance means ASIC will adopt a measured approach where inadvertent breaches arise or systems changes are underway, provided industry participants are making reasonable efforts to comply,” FPA chief executive Dante De Gori said.
AFA chief executive Philip Kewin described ASIC’s compliance attitude as “pragmatic guidance that gives licensees and advisers the level of confidence necessary for a 1 January 2020 commencement of the Code.”
However, both industry body leaders admitted they still had concerns over these standards as they currently stand.
“The AFA still has a number of concerns, particularly the practical workability of Standard 3 around conflicts, and the guidance around Standard 7, benefit payments and fees, but notes that after consultation with FASEA, ASIC will take a facilitative approach to compliance with these standards until the new single disciplinary body is operational,” Kewin explained.
De Gori echoed these sentiments and said: “We have expressed our concerns that these two Standards – which relate broadly to conflicts of interest (including fee and business models), remuneration models, referral arrangements, and gaining client consent from existing clients – need more clarification.”
Both the AFA and FPA assured the industry they will continue to participate in the consultation process over the code with ASIC to develop sensible outcomes for practitioners and the public.
Further the FPA revealed it is in the process of developing additional tools and resources to assist its members with the activities they undertake in an effort to comply with the FASEA Code of Ethics.
