SMSFA joins calls for Standard 3 amendment

In its submission to the authority around its latest code of ethics guidance, the association suggested the wording of Standard 3 needed to change to reflect the actual application of the standard, suggesting guidelines would not be enough for licensees and advisers to have legal confidence around meeting the code’s requirements.

“We continue to believe the strict wording of the standards and the more nuanced wording of the intent and guidance are not compatible,” the SMSFA said.

“In our opinion, the code would be improved if many of the standards were amended to reflect the ‘intent’, for example, in Standard 3, referencing the ‘client’s best interests’. The SMSF Association has previously submitted Standard 3 should be revised to reflect that intent.

“Until such a process is complete, industry will continue to refer to the written code as determinative.”

The association also pointed out that while the latest guidance had confirmed that FASEA was supportive of scaled advice, it had left advisers in the dark as to how such advice could practically be provided without breaching the code, particularly the standards that related to taking account of a client’s broader, long-term individual circumstances.

“The way Standards 2, 5 and 6 apply practically for advisers acting under a scoped authorisation or a limited AFS licence remains unclear,” the SMSFA said. 

“Specifically, members have raised concerns when they are engaged for SMSF advice but the code requires consideration of broader requirements and therefore they cannot act in a limited advice scope.

“These considerations are amplified when the code requires a sufficient broad long-term interest based fact find that is more comprehensive than the consumer requests. This decreases the affordability and efficiency of the advice and documentation.”

The association called on the authority to release further specific guidance on how scaled advice that complied with the FASEA code could be achieved, and suggested the authority draw on ASIC’s work in its forthcoming unmet advice needs project.