Advisers question AFCA/FASEA board links

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.

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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.




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Mike this is just the tip of the iceberg. I'd like to see someone to do a holistic piece of journalism on this severely compromised and conflicted board. Keeping in mind that this is an ETHICS authority, the ethics of this board should be beyond reproach. First of all Dr mark brimble is employed by both griffith and FASEA. He is enormously incentivised to ensure the harshest education standards possible as it maximises the fortunes of him and his employer, who just happen to be a one stop FASEA shop. Secondly, simon longstaff, the so called ethics professional, who has attended a meagre amount of meetings has found plenty time to write a book for private sale about financial adviser ethics (pretty much a guidance for sale) when he is paid to contribute his knowledge to FASEA, FASEA is a financial gift beyond his wildest dreams and he is now looking to clean up. I note that he also ensured his own book was recommended reading material for the exam. It is a scandal how these directors are positioned to clean up financially and how they are now evidently doing just that. There have been multiple other education providers on the board as well, who have ensured a new gravy train has left the station. This is not about consumer groups only. This board has lost the confidence of the entire financial advice community who now believe it to be corrupt.

How can De Gori say ASIC has provided breathing space for advisers? ASIC's statement only covers inadvertent breaches. Systemic breaches are another matter, and that is the category licensees will find themselves in if they pass asset-based fees and life insurance commissions through to self-employed advisers after 1 January. If De Gori thinks ASIC will turn the other cheek he is either a fool, or is privy to some information ASIC hasn't released publicly. We need clarity on this matter urgently.

Well well well...it's all starting to make sense. The fact that the two FASEA Directors are also AFCA Directors is a conflict in itself. So if it comes to FASEA Board split decision, one would assume these two would vote the same way. Isn't it a conflict to create/impose standards on advisers under the guise of "consumer confidence" when you represent those same consumers? Surely they will be biased against advisers and not act as a "disinterested person" (ref Code of Ethics Guidance) to come to an independent decision. Throw in the ethics director and the education director and you can see the financial planning industry directors have no chance of a fair share of voice. Minister Hume, time to clean out the broom cupboard of this conflicted mess.

The FASEA Board is a web of conflicted backgrounds and ideologies and current opportunistic commercial gain.
The process, the withheld submission information and transparency and the outcome has been a failure.
For the CEO to openly state the Code of Ethics is not subject to change when their own guidance document states,
" The Code is a living document subject to change " is beyond any level of acceptance.
There are Standards within this Code which are clearly rooted in ideological bias regarding remuneration types and subjective assessment of what determines value designed to throw the net as wide as possible in order to capture as many advisers regarding a possible breach.
This is not a document entirely designed for the benefit and protection of consumer outcomes, but a document designed to effect and enforce change regarding adviser remuneration models.
This has been driven by several FASEA Directors with an overwhelmingly influential background in consumer advocacy and documented opposition to adviser remuneration and the position of the regulator as evidenced by many statements and submissions.
It is also unacceptable the funding mechanism of FASEA has come from some of the very organisations that have been and are currently under enormous scrutiny from regulators regarding ethical behaviour and corporate culture.
In the most basic terms, this is a stitch up driven by conflicts of interests, ironically formulating a the very document to manage conflicts of interest.
It must be identified as having failed.

Couldn't have expressed the sentiment any better myself!

I've heard on the grapevine, FASEA's funding will run out in May next year. If Jane Hume is sufficiently across the detail on this laughing stock of an organisation, she will let it die and then resuscitate the organisation with a new board, where a majority are practicing financial planners. Only then will we see sensible standards, that are workable and in-line with the mandate given to it by the Government. There are a great many of us who want to see FASEA succeed and our profession held to higher standards. But we need experienced people, who understand the advice profession.

The current funding agreement runs until June 2021. On what basis would it end earlier?

Mr Glenfield has stated that further guidance is coming on 3 and 7, but also states that he understands people want approval on the form of income they can earn. He goes on to say that ethics is for the judgement of the individual, so the code should be read in entirety, not cherry picking standards. What he does not say, and surely he understands the technical fact - is that it is not just an ethics code, but law!! i.e. to comply with law does require a very finite understanding of it's operation - not just some feel good, are you thinking you're doing the right thing vibe. With Fees for No Service and dealers now chasing advisers for payments from 10 years ago, after advisers implemented and complied with those same dealers standards, we know pretty well what damage can be done when regulators need a scalp and they conveniently reinterpret historical guidance into breaches.

Wakey wakey Financial Planners. You're being taken advantage of here. Oh wait your licensee (AMP or whoever) or the FPA will act on your behalf and defend you. ha ha ha ha ha. Keep paying those FPA fees it certainly worth it....not. you idiots. and just remember fall foul of 1 of those 12 standards you'll fall foul of at least 3 and it's all over red rover.

The Lib/Nat Government appoints the board. Cry me a river.

People can keep pointing out links imagined and otherwise. For mine, it makes sense having someone from the education sector (yes, a University) on the board of Fasea. Do you really think Brimble gets a "volume bonus" for the amount of courses undertaken at Griffith? Just because advisers have been on the volume gravy train they think everyone acts as unethical as they have been!

Why don't you take the arguments to the government you all voted for?? Keep voting the Libs in and you will keep getting what the big banks want.

Do you really think that Brimble can turn up to an empty lecture theatre with no one attending year after year? Never heard of Redundancies within Uni's? My association with Universities goes back for over 10 years and I would have no hesitation saying that they are (Heads of Schools, Vice Chancellors) more sales driven and focused on "student numbers/enrolments" then any financial planning business I've ever worked in over 20 years. Casual Academics are paid per student, Full time academics aren't but there is none left anyway as they've all been made redundant when students started enrolling in Mining Courses at Tafe.

I too have witnessed the extreme sales driven culture at universities in recent times Adam.

It's interesting how people who are supposedly interested in conflict avoidance so often seize upon remuneration method as the determinant of conflict, and ignore the bigger picture. Just because Brimble doesn't get a "volume bonus" doesn't mean he isn't conflicted.

Unfortunately all this misplaced focus on remuneration method has also enabled conflicted, inappropriate, financial advice to flourish with impunity. About 90% of SMSF advice would fall into that category, most of it given by accountants who hide behind the irrelevant remuneration method excuse of "it's OK because we charge fee for service".

I agree Adam ex-FPA member that Uni's are sales driven - you can thank successive Liberal Government over the decades for that as well. Follow the money, education including Uni's is being privatised - why so many fee paying overseas students?? Because they pay! Why blame a Uni for doing anything that will keep them in business. Externalities of the privatise at all costs ideology of the coalition come back to bite people in all sorts of ways!

You might think it stinks but they're not breaking any laws. They're making them! Keep in mind education providers ARE legitimate stakeholders in this game AND that the government appoints the board. THE GOVERNMENT APPOINTS THE BOARD!

Who you gonna blame? BLAME THE GOVERNMENT. Reap what you sow. This is the "free*" market in action (*there is no such thing is there).

And aside from all this, a quick look at Brimble's CV shows that he is absolutely qualified and an appropriate person to sit on the board. I doubt whether "a Professor (Finance) in the Department of Accounting, Finance and Economics in the Griffith Business School" is a casual, paid per student.

Brimble's qualifications and his payment method do NOT prevent him from being conflicted!!

All those accountants who inappropriately advise their clients to get SMSFs are very well qualified, and are only paid by fee for service. But they are still conflicted!!

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