The Financial Planning Association (FPA) has extensively overhauled its professional conduct code, stripping out 20,000 words and moving to a single-page, principles-based document focused on the primacy of professional judgment.
The FPA stated the structural change in moving from a long and complex rules-based system to regulate member conduct was based on member consultation and reflected the model of industry regulation that is being considered under the Quality of Advice Review.
The new code retains the 10 principles first outlined in 2009 and has organised them under three pillars – Being, Knowing and Doing – with the first covering putting the client first, integrity, objectivity and fairness, the second covering skills and knowledge, and continued professional development, and the last addressing professional behaviour, competence, diligence, and confidentiality and data protection.
FPA chief executive Sarah Abood said key elements of the conduct code were that members place a client’s interests first, in line with laws and regulations, and their actions “are aligned with promoting a culture that supports and requires integrity in others”.
Abood added these elements went further than members acting ethically with clients and also applied to their organisation and the wider profession.
“We included promoting a culture of integrity in the code to highlight that ethical principles apply at all levels, including those in senior positions who have the most influence over the culture of their organisation – not only client-facing practitioners,” she said.
“This issue was raised by members during consultation on the new code who feel strongly that it’s important that ethical behaviour is supported at all levels of an organisation.”
In related news, the FPA also welcomed the tabling in parliament of the Financial Services Compensation Scheme of Last Resort Levy (CSLR) Bill 2022, but questioned why the scheme did not cover managed investment schemes (MIS), which were subject to complaints to the Australian Financial Complaints Authority (AFCA).
“While it was in opposition, Labor suggested amendments which would at least include MISs in the CSLR and it is disappointing that these changes have not been included in the bill,” it said.
“For example, most of the victims of the Sterling Group collapse would not be covered under the proposed scheme. This is also the case for most investors in the Mayfair 101 Group products.
“These products were often promoted directly to investors (using the wholesale/sophisticated investor exemption). These people have lost their life savings and in many cases are now completely dependent on the age pension.
“At present, after nearly four years of operation, there is $3.7 million in unpaid AFCA determinations relating to financial advice due to insolvency. Yet MIS operators have $6.4 million outstanding against them at present. The total unpaid determinations are $14.7 million across all the areas AFCA manages.
“This makes it clear that the CSLR must extend across AFCA’s remit to achieve its aims of ensuring that victims of financial misconduct can be compensated where the firm involved has become insolvent.”
