New conflicts code for advisers

By Ross Kelly

new guidelines on conflicts of interest that will impose tougher requirements on advisers than those introduced by the Australian Securities and Investments Commission (ASIC) will be released this month, with Financial Planning Association (FPA) chief executive Kerrie Kelly hinting adherence to some guidelines would be mandatory for members.

The release of the principles will herald the final chapter of a three-pronged approach to raise standards across the industry by the FPA, which has already issued a code on soft dollar payments and guidelines on the rebates paid by platforms and fund managers.

Kelly said at a Sydney press conference that the guidelines would go over and above the requirements of ASIC’s PS 181 requirements, which require advisers to manage conflicts of interest.

However, Kelly remained tight-lipped on specific details of the new principles and the extent to which they would be mandatory rather than just guiding principles.

“[The details] have still got to be worked through, some of them may be mandatory. But the mandatory ones will tend to fit in a code, whereas these are high-level principles about the sort of industry we want to be.

“Some of them may be applicable in a couple of months time with an implementation period. Some of them may be things we want to move to over a five year period because there may be structural issues.”

Kelly said the FPA would consult with ASIC, consumer groups and the Investment and Financial Services Association (IFSA) before the principles are finalised.

“There is a separate task force from IFSA that’s looking at the issue, it’s not a combined task force, because they want to make sure there’s no conflicts of interest as we develop the principles,” Kelly said.

She also played down the significance the new choice of fund legislation will have on conflicts for advisers, stating that the potential for conflicts to arise would always be an issue despite the introduction of choice from July 1.

“With this issue of conflicts of interest, the FPA task force, which is made up of members of the FPA, is looking at all the potential situations where we perceive conflicts may come into play. The super choice environment is a high focus period at the moment … but it’s not the only one.”