Association of Financial Advisers (AFA) chief executive Phil Anderson has stated his desire to see the Code of Ethics revamped next year following a Treasury review as there are problems with numerous aspects of its content.
Writing on LinkedIn, Anderson said the intentions of the Code, which was introduced three years ago, had not played out in the expected way. This was exacerbated by the fact the industry had been divided in its views and support of the policy.
A particular issue had been Standard 3 which stated advisers must not advise, refer or act in a matter where they had a conflict of interest or duty, an idea which Anderson said was “completely impractical”. A second issue was Standard 6, a “genuine concern” regarding potential limitations on providing limited or scoped advice.
But Anderson said there was a third issue which he felt had received a lack of attention which was the introduction. Its content demonstrated the difference between the treatment of financial advice professionals and those in the medical profession, he commented.
He said: “In the first sentence it talks about financial advisers refocusing from providing commercial services to acting as professionals. I think many advisers would find this offensive, and would have in 2019, when it was issued. Another sentence that stands out to me is the following:
“While the ethos of “the market” legitimises the pursuit of self-interest through the satisfaction of others’ wants, the ethos of “the professions” aims to secure the public good through the subordination of self-interest in favour of serving the interests of others.”
“I am not sure if the author of this has seen a medical specialist recently. What they charge gives no indication that they have subordinated self interest.
“It is a reality that they should expect a reasonable return on their investment in their qualifications, skills and expertise. This reference to the ‘ethos of the market’ and ‘professionals subordinating self interest’ does not align with reality.”
Minister for financial services, Stephen Jones, had asked Treasury to review the Code in 2023 following the Quality of Advice Review.
Very much love the comments made by Phil regarding the medical profession.
You could use lawyers in the same example, along with a bunch of other ‘professions’.
I’m sick of risking being punished like I am a professional but at the same time not considered as if I am a member of a profession.
Nailed it Phil. It is not possible for a financial planner to comply with Std 3 so we are all in breach. That being said lawyers, accountants, doctors etc could not comply either if they had to comply with std 3.
Std 6 is written for the lawyers to make it easier to sue planners on a technicality or obscure proposition.
The other stuff never really noticed. We have been so disrespected, denigrated and insulted for over 10 years I don’t give that kind of crap any airplay. Can’s be used against me. Std 3 and Std 6 can.
Thanks Phil. Keep on raising the issues with the Code of Ethics. Every aspect of it needs to be revisited, and not by the legal practitioners who were responsible for writing it in the first place.
eg Standard 7 – how can a client give free, prior and informed consent to the benefits an adviser may receive when they themselves have no idea of the benefits they will receive by obtaining advice in the first place.
Standard 7 clearly includes fees in the benefits an adviser can receive.
My experience is that clients who can see the value of the advice they have received are far more likely to be able to give “informed” consent to fees. Or has win/win gone out the window?