Questions are being asked about the Australian Financial Complaints Authority’s (AFCA’s) approach to the Financial Adviser and Standards and Ethics Authority (FASEA) code of ethics in circumstances where the boards of the organisations share two directors.
The Financial Planning Association (FPA) has welcomed the approach signalled by AFCA to the code of ethics, but advisers have pointed out to Money Management that two of FASEA’s consumer directors are also directors on the board of AFCA – Elissa Freeman and Catriona Lowe – both of whom were also consumer directors on AFCA’s predecessor body the Financial Ombudsman Service (FOS). It is not known whether either director recused themselves from the AFCA board’s deliberations.
AFCA’s deputy chief ombudsman, Dr June Smith on Friday outlined the authority’s approach to assessing adviser conduct obligations under the new code ethics to the FPA Congress in Melbourne with her approach being welcomed by FPA chief executive, Dante De Gori.
He said he believed Dr Smith had made it clear that AFCA would be taking a measured and considered approach to interpreting the Code of Ethics’ provisions until the establishment of the single disciplinary body to monitor and enforce the Code.
“The FPA fully supports the aim of the Code which will be to improve conduct and ensure all financial planners place their clients’ interests first, and that they act in a way that is consistent with the values and standards expected of our profession,” he said.
De Gori said that AFCA’s approach, along with ASIC’s confirmation on their facilitated compliance approach to standard 3 and 7, provided much needed breathing space for financial planners to calmly work through the remaining areas of uncertainty with FASEA over 2020.
Dr Smith on Friday said AFCA would assess adviser conduct by giving the Code its practical meaning, taking into account:
- The intention and objectives of the Code as a whole and the professional standards framework from which it is derived;
- The current legislative, regulatory and professional environment within which the Code operates;
- The Financial Adviser Standards and Ethics Authority’s (FASEA) guidance on the operation of the Code’s values and standards; and
- The Australian Securities and Investments Commission’s expectations about steps Australian financial services licensees should take to ensure their advisers comply with the Code and specifically the guidance that they will take a facilitated compliance approach with respect to Standards 3 and 7 while FASEA continues to refine its guidance over the period up to the establishment of the single disciplinary body.
A Money Management survey has revealed a high level of adviser concern at the level of influence exercised by the consumer representatives on the FASEA board.