The Financial Adviser Standards and Ethics Authority (FASEA) has released the industry’s feedback to its recent consultation paper but has said the final decision on any further amendments to conflicts of interest standard should be addressed by Superannuation, Financial Services and the Digital Economy Minister Jane Hume in 2022.
Following the release of FASEA’s consultation paper, “Financial Planners and Advisers Code of Ethics 2019 – Standard 3”, in November, the authority received 40 submissions from industry professionals and organisations as to how the standard dealing with conflicts of interest should be altered.
The authority noted the feedback identified a split in views from those representing consumers and those who are industry participants.
“Consumer submissions consider that Standard 3 in its current form is delivering good consumer outcomes and should be retained,” it stated.
“Industry participants consider that amendment is required to Standard 3 and provided a broad range of suggestions as to how that may be achieved. There is, however, no consensus amongst industry as to the form such an amendment should take.”
In it summary report on the consultation, it added some licensee and practitioner submissions called for the management of conflicts rather than avoidance.
FASEA, however, continued to support the view expressed by the financial services royal commission that conflicts of interest and duty should be eliminated rather than managed, and noted the majority of respondents agreed this view should be incorporated into Standard 3 with minor revisions, which would change the wording to: “You must only advise, refer or act where you do not have a conflict of interest or duty, being that which could reasonably be expected to induce you to act other than in the client’s best interest.”
Despite this, it did not commit to a final position, but stated: “Given FASEA’s imminent wind-up and transfer of functions to Treasury and ASIC as at 31 December 2021, FASEA considers it appropriate that any final determination on amendments to Standard 3 be addressed by the minister in 2022.”
