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FASEA, Financial Planning

Code of ethics must be viewed in full

FASEA code of ethics

A senior consultant has advised practitioners they must look at the Financial Adviser Standards and Ethics Authority (FASEA) Code of Ethics as a whole when determining their compliance procedures in relation to it.

Financial services practitioners who need to comply with the new Financial Adviser Standards and Ethics Authority (FASEA) Code of Ethics should not look at any of the 12 standards in isolation to determine whether adherence to the code is practicable, a senior consultant has said.

Prosperity principal director Nidal Nanoun told an Accurium technical webinar last Friday that the advisory community needed to keep this in mind when scrutinising standards 3 and 7, which are currently causing the most contention in the industry.

“The way I see it is that you really need to make sure you don’t look at standard 3 and 7 alone. So effectively you need to make sure, [for example] if you’re meeting standard 3, you have met the other 11 standards,” Nanoun noted.

He said if advisers were worried about whether they had complied with standard 3, because they had a potential conflict of interest, if they could prove they acted in the best interest of the client, everything had been appropriately disclosed and the client had been well informed, they were unlikely to have committed a breach of the code.

FASEA itself has been advocating for the code of ethics to be applied in this manner, he added.

“The key thing that FASEA keeps talking about is the ethics code must be applied in its totality – you can’t just read one standard at time and try to use it as a checklist,” he said.

However, he did note standard 3 could present some issues for advisers in remote communities.

Standard 3 dictates practitioners must not advise, refer or act in any other manner where they have a conflict of interest or duty.

“The main example [FASEA] gives is if you have a husband and wife client and they are divorced, now you can no longer act on [behalf of] both of them because there will be a conflict of interest,” Nanoun said.

“But that is creating a few issues particularly for clients in regional areas where [a limited number of advisers] exist.”

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