Time to ensure FASEA Code meets the ‘intent’

The Financial Adviser Standards and Ethics Authority (FASEA) should commit to amending the written Standards in the Code of Ethics.

FASEA’s updated Guidance now gives greater importance to the ‘intent’ of the Standards that was unclear in preceding FASEA documentation and Guidance.  But the SMSF Association still believes the strict wording of the Standards and the more nuanced wording of the intent and Guidance are incompatible.

With industry generally supportive of this ‘intent’, FASEA should take the opportunity to resolve all doubt.

Association CEO John Maroney says: “We support the broader intent of each Standard in the Code, but, in our opinion, the Code would be improved if many of the Standards were amended to reflect the ‘intent’. Ultimately, it is only the written Code that is determinative, particularly years into the future.

“The intent of Standard 3, which references the ‘client’s best interests’ while the actual Standard doesn’t, is a perfect example. Until the Standards in the Code of Ethics are amended, the industry will continue to refer to the written Code as determinative.”

The Association also calls on FASEA to issue a further Guidance document explaining how a financial adviser can provide single issue or scaled advice that complies with its Code of Ethics. Although more guidance is a welcome step forward, “we fear it remains ambiguous as to how it relates to single issue or scaled advice”.

Association CEO John Maroney says: “We believe a key challenge for the advice sector is how to service clients’ advice needs that may be limited to a single issue or for scaled advice needs, for example, superannuation. This is particularly pertinent for SMSF advisers and SMSF trustees. 

 “Therefore, we support that aspect of the Guidance that says the Code is not seeking to prohibit this type of advice – only to ensure that it is provided where appropriate.

“However, we believe the Guidance needs to provide advisers with clarity on ‘how’ this type of advice can be provided. The way Standards 2, 5 and 6 apply practically for advisers acting under a scoped authorisation or a limited AFS licence remains unclear.”

Maroney concludes that the Association and other professional bodies are committed to addressing scaled advice and its impact on the ‘advice gap’ and would welcome the opportunity to work collaboratively with FASEA to help develop and implement changes which would improve the provision of single issue and scaled advice.