FASEA answer holds line on code of ethics

FASEA Financial Adviser Standards and Ethics Authority standard 3 adviser code of ethics code of ethics financial advisers financial planners Amanda Stoker remuneration

19 December 2019
| By Mike |
image
image
expand image

The Financial Adviser Standards and Ethics Authority (FASEA) has sought to argue to Parliament that Standard 3 of its Adviser Code of Ethics demands no more of financial advisers than similar codes applied to other professions.

Answering a question on notice asked by Queensland Liberal Senator, Amanda Stoker FASEA has sought to hold the line on its approach to the code of ethics and requirements around adviser remuneration and conflicts of interest.

In doing so, it claimed that the code did not seek to ban particular forms of remuneration or determine that particular forms of remuneration were always an actual conflict.

It said that FASEA believed that its approach to conflict to be “both realistic and practical and in line with community expectations”.

“The Code does not seek to ban particular forms of remuneration nor does it determine that particular forms of remuneration are always an actual conflict,” the FASEA answer said.

“The guidance discloses the intent of the standard and notes that advisers will not breach standard 3 merely by being a duly remunerated employee of an entity that lawfully provides retail financial advice and services, provided the provision of that advice and services are in the best interests of their client and comply with the other provisions of the Code.”

The FASEA answer said this meant that in assessing whether they had an actual conflict the advisers needed to consider their remuneration in the context of the whole of the Code and satisfy themselves that the remuneration did not impact their ability to provide advice that met the provisions of the code including that:

· the advice is in the best interests of the client;

· the fees and charges (regardless of type) are fair and reasonable and represent value for the client and are fully understood by the client

· the client understands the benefits, costs and risks of the recommendations made; and

· the advice and fee structure are appropriate for the client.

Explaining why advisers were being asked to do no more than other professionals, the FASEA answer said: “In the case of Standard 3, the ‘standard of judgement’ is one commonly applied in Australian Law and is consistent with that applied in other professions”.

“An adviser needs to assess if: an unbiased (disinterested) and reasonable person, in possession of all the facts, could reasonably conclude, that an arrangement or benefit could induce an adviser to act other than in their client’s best interest.”

It said that an arrangement that failed that test was in breach of Standard 3, adding “otherwise, arrangements are permitted - whatever their specific form”.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Interesting. Would be good to know the details of the StrategyOne deal....

3 days 21 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 1 day ago

increased professionalism within the industry - shouldn't that say, FAR register almost halving in the last 24 months he...

4 weeks 1 day ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 3 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

2 days 19 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

1 day 22 hours ago