FASEA chair was briefed by ASIC on code

30 June 2020

The Australian Securities and Investments Commission (ASIC) went right to the top of the Financial Adviser Standards and Ethics Authority (FASEA) and told its chair, Catherine Walter, that it believed additional interpretative guidance was needed around the FASEA code of ethics.

A letter signed by ASIC senior executive leader, Financial Advisers, Louise Macaulay and addressed to FASEA acting managing director, Dr Mark Brimble, reinforced ASIC’s desire to have specific interpretative guidance.

The letter also reveals that the Federal Government quite specifically rejected any notion of endorsing the codes of the Financial Planning Association (FPA) or the Association of Financial Advisers (AFA) as being sufficient to stand instead of the FASEA code.

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“The letter, dated 31 May, 2018, and obtained under Freedom of Information, starts out requesting that FASEA treat the letter as confidential and then, under the heading of “Desirability of additional interpretative guidance” states: “We generally agree with the statements of principle and expectations outlined in FASEA’s Exposure Draft and the standards they outline are consistent with our view of what constitutes ethical behaviour”.

“However, as we have separately explained to FASEA’s Chair, Catherine Walter AM, we consider that additional interpretative guidance which assists relevant providers and monitoring bodies to apply the code in practice would very valuable and we encourage FASEA to prepare it,” the letter said.

“This guidance would support the Government’s clear policy intention to introduce one single uniform set of ethical standards for all relevant providers (the government rejected an earlier recommendation that each relevant provider would join a professional association and comply with its code). In particular, the guidance will help ensure that:

  1. Relevant providers will have a clear and reliable guide to the behaviour expected of them;
  2. Monitoring bodies will apply the code consistently, meaning determinations of what conduct breaches the code will be consistent across compliance schemes; and
  3. Consumers will know what behaviour to expect of their advisers and demand that behaviour.

“It is also the clear policy intention of the professional standards reforms that FASEA will be responsible for setting the ethical standards of behaviour for relevant providers. Accordingly, we think it is FASEA that should shape the meaning of the code’s provisions more fully be developing guidance on the code,” it said.

“We recognise that FASEA’s currently proposed education standards would require all relevant providers to undergo training on the code and we think this is very important. It will help to ensure that relevant providers have a strong awareness of the code and its requirements. However, we do not think this is a substitute for additional interpretive guidance on the code because it will not deal with the risks of inconsistent interpretation of the code’s requirements, particularly given this training may be provided by several different training providers.”




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ASIC is the executive arm of government, a so-called 'policeman'. It is not the rule-maker, nor standard-setter-- parliament makes the laws. Is it the place of a rule-enforcer to say 'this is what we think the rules and standards should be?'

I agree Brian. This is not the first time ASIC have tried to be both the Legislator and the Regulator in Financial Services.
It appears to me that FASEA decided to only consult with ASIC on the Code of Ethics and was not prepared to take accountof submissions provided by Professional Associations and advisers who actullay work in the Financial Planning area.
FASEA was supposedly setup to be a separate government appointed body to look at the educational requirements and Code of Ethics to be applied going forward for Financial Planners. They were supposed to consult all stakeholders when doing this.
Based on the latest revelations with the release of the letter from 2018 showing that ASIC basically told FASEA what they wanted to be in the Code of Ethics (acting as a legislator) but that they were not to let anyone else know about this request.
This just shows how unethical and conflicted are both ASIC and FASEA in this whole process.
If we were to adopt this appoach with our clients I have no doubt prison sentences would result.
It is time the Minister Jane Hume stepped into sort out this FASEA mess before half of the Fnancial Planning fraternity call it quits.

Minister Hume was a senior policy adviser with Australian Super. I doubt she really cares about financial planners.

It appears there was no need for FASEA to be created - just another government department. ASIC developed the code of conduct, and ASIC can easily monitor CPD points through including it in the annual audit requirements.

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