On Monday (20 December), FASEA revealed it had received 40 written submissions from organisations and individual financial advisers on proposed amendments to the wording of the contentious Standard 3 of its code of ethics.
However, it confirmed that there was “no consensus amongst industry as to the form such an amendment should take” and that it would defer the issue to Treasury.
In a summary report issued by the body on Monday, FASEA revealed that 19 submissions supported Option 1 with revisions.
Option 1 would have seen FASEA incorporate its intent into Standard 3, meaning advisers “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.”
And while this was the most popular, in its submission, the Association of Financial Advisers (AFA) asked that the focus be clarified by the emphasis being on “material” or “actual” conflicts.
“We are open to an alternative form of wording for ‘material’, however our intent is to ensure that the focus is not directed to very minor forms of conflicts, such as attendance at training events, basic merchandise or minor social events,” AFA said.
Similarly, the Financial Planning Association of Australia (FPA) backed Option 1 but asked for the wording to read: “You must only advise, refer or act where you do not have a conflict of interest or duty, that could reasonably be expected to induce you to act other than in the client’s best interest.”
The Association of Independently Owned Financial Professionals (AIOFP) earlier told the ifa that while the body does find the current format of Standard 3 “viable”, it prefers Option 1 of the three FASEA is currently consulting on.
In its submission, the AIOFP said: “Given our acceptance of your Option 1 we do not believe any other wording needs to be adopted.
“What is required however is that an education program be instigated upon any change being made that covers not just the change to the wording of the Standard, but rather to inform the industry as a whole as to how the code was intended to operate.”
With FASEA set to be wound up on 31 December 2021, it confirmed on Monday that it “considers it appropriate that any final determination on amendments to Standard 3 be addressed by the minister in 2022”.
In November, FASEA said that based on feedback received on Standard 3 during the consultation process conducted on its code of ethics, it was considering amending the wording of the contentious standard to align it to its intent.
“The code of ethics provides an ethical framework of values and standards to assist advisers in exercising their professional judgement in the best interests of their clients,” FASEA chief executive Stephen Glenfield said at the time.
“FASEA understands that some stakeholders have raised concerns regarding the wording of Standard 3 and welcomes stakeholder feedback on proposed options to align the wording of the standard with the intent of the standard.”
Consultations wrapped up on 1 December.
Laughable that it was the lawyers that were the driving force behind the Code, but then it is the lawyers that are arguing about the nuances of it.
The quicker Government gets a backbone and separates advice from the product manufacturers the better.
Financial Planners don’t have a problem with the existing standards…Salespeople or people who advise on a related product do have a problem and want an amendment. Why is that you ring up AwareSuper and they said if wanting to speak to a Financial Planner press 3. when they’re not Planners they’re Product Advisers.