Licensees should be responsible for codes of conduct
Professional codes of conduct should be the responsibility of financial services licensees rather than industry associations in order to be fairer to consumers, according to MyAdviser managing director Philippa Sheehan.
The Australian Securities and Investments Commission (ASIC) this week outlined its approach to professional codes of conduct and how they would obviate the need to comply with opt-in in Consultation Paper 191, Future of Financial Advice: Approval of codes of conduct for exemption from opt-in requirement.
Sheehan supports what ASIC is trying to do and the theory behind the paper, but says the approach will further "focus" the influence of the two main adviser representative bodies, the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA).
"As financial services licensees, we are the ones responsible and liable for the advice our representatives give, therefore licensees should have their own code. The associations should work with us to help guide us in creation of our own codes," Sheehan said.
If the approach goes through as it currently is, it will effectively create even more of a duopoly between the FPA and AFA, according to Sheehan.
Licensees could also have some advisers who wanted to sign up to the FPA's code, others who wanted to sign up to the AFA's code, and potentially others signed up with other industry bodies such as the SMSF Professionals' Association.
That would mean a licensee, in order to maintain an acceptable level of compliance, would have to monitor multiple codes, Sheehan said.
"Licensees are responsible for their advisers, they take the enforceable undertakings, and they are responsible for implementing the compliance of advisers, so it would be a lot easier if we weaved our code into that," she said.
She said every licensee already had a responsibility to meet a range of compliance standards, and for smaller groups and boutique licensees that did not have the resources to design and implement their own codes, associations could help with pro-forma codes.
"I support the FPA in what they've been doing but they should be working on pro-forma [codes] for smaller licensees, like they've done with what a disclosure statement should look like. Then it's up to a licensee to mandate it and implement the systems to be able to control that in-house," Sheehan said.
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