Time for clarity and a clean house on FASEA
As 2020 draws to a close, it is worth noting that the Financial Adviser Standards and Ethics Authority (FASEA) was high on the list of problem areas for financial advisers in January and it remains just as high on that list as we begin to close out the year in November.
The FASEA was established with good intentions. It was established to help drive higher standards and more professionalism in the financial planning industry and it has arguably succeeded in achieving some of the objectives the Government set for it back in 2016/17.
But what FASEA has most definitely not done is win the support of a majority of the financial planning industry – something which it needed to do if it was to successfully take them on the journey outlined in its statutory objectives.
If any proof were needed of this, the FASEA board received it in late October and early November as the major financial planning organisations lodged their submissions responding to FASEA’s latest guidance around the authority’s Financial Planner code of ethics. Putting aside the polite expressions of support for FASEA’s objectives, virtually every major advice organisation has made clear they remain deeply dissatisfied.
This should be of considerable concern to the Government and, in particular, the Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume, because the continuing complaints of the Financial Planning Association (FPA), Association of Financial Advisers (AFA), the SMSF Association, the Institute of Managed Account Professionals (IMAP) and the Stockbrokers and Financial Advisers Association (SAFAA) make clear that FASEA is seriously at odds with the operational end of the financial planning industry.
What is more, FASEA has been seriously at odds with the operational end of the financial planning industry for more than 18 months, particularly around Standard 3 of the code of ethics, without having been able to satisfactorily repair the situation.
What should also be concerning to Hume is that any examination of statements made within Senate Estimates or within the House of Representatives Standing Committee on Economics suggests that politicians on both side of politics are painfully aware of the criticisms of FASEA with a number of Government backbenchers openly challenging the actions of the authority and its executives.
It is in all these circumstances that the Government would do well to roll the operations of FASEA into the new Financial Adviser Single Disciplinary Body recommended by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. What is more, it would do well to ensure that the FASEA code of ethics is made fit for purpose before the Single Disciplinary Body becomes operational.
The simple bottom line is that because of the Government’s decision not to proceed with Code Monitoring Authorities and because of the time taken to establish the Single
Disciplinary Body advisers have been left to deal with an arguably flawed code of ethics while operating in highly nebulous regulatory territory. Advisers deserve better and the Government should clearly signal its intentions.
This is the last print edition of Money Management for 2020. The Money Management daily e-newsletter will continue through to Friday, 18 December and resume in the second week of January. The print edition will be back in February.
On that basis, myself and the entire team at Money Management wish our readers an early Merry Christmas and safe and prosperous New Year.
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