AFA urges against licensee codes of conduct
The Association of Financial Advisers (AFA) has echoed the Financial Planning Association (FPA) in pointing to the added red tape and logistical difficulties which would accompany allowing licensees to create their own codes of ethics.
In circumstances where both the FPA and the AFA have been at the forefront of developing codes of ethics to which their members can commit, AFA chief executive, Brad Fox said he believed that allowing licensees to create their own codes of ethics and appoint external parties to monitor and enforce them would introduce more red tape and costs into financial advice, was likely to result in unnecessary duplication, and could give rise to serious conflicts of interest.
Responding to the release of exposure draft legislation by the Government last week, Fox said the financial advice market already has access to robust and effective codes such as that of the AFA.
“Members of the AFA adhere to six principles of professionalism that form the basis of the AFA Code of Conduct,” said Mr Fox. “They were developed through an extensive cross-industry collaboration so as to be appropriate to our members and their clients, and to effectively set expectations for ethical and professional conduct above and beyond the letter of the law.”
He said that if licensees were to create their own codes, monitoring and resolution procedures, it would be akin to reinventing the wheel.
Fox also warned that if the approach outlined in the exposure draft legislation were to be adopted then ASIC would need considerable additional resources to assess numerous, possibly hundreds, of requests for approval of codes and/or third party monitoring organisations.
“We are also very concerned about the perceived and real conflict of interest that would be created by allowing licensees to have their own codes, albeit with a third party monitoring service,” he said. “This would mean licensees would need to sanction themselves for failure to adhere to their own code. We don’t see this as best practice for an industry in the process of establishing itself as a recognised profession.”
Recommended for you
As the 1 January 2026 education deadline looms, the FAAA is predicting as many as 1,000 advisers could exit the profession, triggering a significant experience loss for the profession.
AMP has made an internal promotion to head of business development for wealth distribution, as chief executive Alexis George has said the firm is doubling down on its BDM team.
A Supreme Court of Western Australia jury has issued its verdict regarding unregistered MIS operator Chris Marco, who was on trial for 43 fraud charges, with ASIC stating the verdict ends a “sorry chapter”.
Investment Trends has revealed Australian advisers are increasingly turning to ETFs to provide portfolio diversification, while new inflows for unlisted managed accounts have seen a double-digit drop.
