AFA accuses FASEA of failing to deliver greater code clarity
The Financial Adviser Standards and Ethics Authority (FASEA) has added significantly to the compliance burden of financial advisers without delivering any greater clarity to its financial adviser code of ethics, according to the Association of Financial Advisers.
In a submission responding to the release of FASEA’s latest code of ethics guidance, the AFA has pointed to the fact that financial advisers are now being expected to deal with three guidance documents entailing more than 90 pages.
“This is overwhelming for financial advisers, particularly at this point, as there are so many other factors for financial advisers to contend with. In this context, it is more than apparent that the actual outcome of establishing a code of ethics for financial advisers is substantially different from the original intent of the code of ethics,” the submission said.
“The existence of three guidance documents, in addition to the explanatory statement and the actual code itself, presents additional and unnecessary complexity as FASEA’s expectations on certain issues seems to have changed with the interpretation contingent on which document a financial adviser reads,” the AFA said.
“An example is the appropriateness of providing advice to a divorcing couple, where it now appears that FASEA suggests that this is still possible. The receipt of referral fees by licensees and CARS is another example of FASEA’s differing guidance, with the published position in December 2019, being more flexible than the current position on this issue. These examples highlight how difficult it is for financial advisers to clearly understand the FASEA code of ethics, what is expected of advisers and how they can operate with comfort and surety that they are abiding by the code.”
“It remains our view that the code itself needs to be reviewed, rather than just focussing upon the delivery of multiple guidance documents, which merely adds to the complexity.”
The AFA submission, like that of the Financial Planning Association (FPA) and the Institute of Managed Account Professional (IMAP) is also harshly critical of FASEA’s approach to Standard 3 stating that the “standard is just not practical in a financial advice context, on the basis of a literal interpretation of the wording in the Standard”.
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