Questions swirl around ASIC's opt-in consultation paper
The Australian Securities and Investments Commission (ASIC) last week released its consultation paper Future of Financial Advice: Approval of codes of conduct for exemption from opt-in requirement raising a number of questions for planners.
The first of those questions is whether it is seemly to sign up to a code of conduct just to obviate the need for “opt-in”.
The second is whether adherence to an ASIC-approved code of conduct is likely to prove more arduous than the two-year opt-in.
And the third question is whether adherence to an approved code of conduct actually matters in the context of the Federal Opposition having promised to repeal the Future of Financial Advice opt-in provisions in the event it gains Government at the next election.
One of the most senior executives working in the financial planning industry earlier this year wrote to Money Management making a very important point – that professional financial planners should be willing to sign up to a code of conduct for better reasons than simply obviating the need for opt-in.
To directly quote that executive: “Why should advisers be part of a code of conduct? Not to gain an exemption from opt-in, but in recognition of the moral responsibility that comes with managing other people’s money”.
The arguments made by that executive were absolutely compelling and, to a degree, pointed to the inappropriateness of having allowed codes of conduct to become a political bargaining chip in the rough-house environment which marked the final negotiations around the FOFA legislation.
His arguments appeared even more compelling last week, when the contents of the ASIC consultation paper were closely examined and it became clear that the regulator intended to do nothing more than codify the broad requirements of opt-in within the codes of conduct it approved.
Proof of this was provided in the examples it cited, such as:
- “Allow a longer period for clients to opt in, combined with other specific code obligations.”
- “Regularly advise the client of their ability to opt out, in combination with other specific code provisions.”
In the hours following the release of the ASIC discussion paper, the Financial Planning Association outlined proposed revisions to its code of conduct clearly aimed at compliance with the regulator’s approach.
However, any reading of the FPA code of professional practice reveals a worthy document containing high ideals which should confirm there are better reasons for planners to sign up than simply obviating the need for opt-in.
It would be sad to see high ideals become tarnished by acts of political expediency.
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