AFCA will use FASEA code

29 November 2019

The Financial Adviser Standards and Ethics Authority (FASEA) code of ethics will be taken into account by the Australian Financial Complaints Authority (AFCA) effective from 1 January, next year.

While the Australian Securities and Investments Commission (ASIC) has signalled a facilitative approach to the code, AFCA deputy chief ombudsman, Dr June Smith said the authority would take a measured and considered approach to interpreting the code’s provisions.

Addressing the Financial Planning Association (FPA) national congress, Smith said: “AFCA will only assess adviser conduct against the Code where a complaint and the conduct has occurred after 1 January, 2020”.

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AFCA considers complaints about firms who provide financial advisory services and products to consumers. This includes assessing whether the conduct of individual financial advisers employed by these firms meets legal, industry and professional standards.

AFCA will 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.

Smith said the Code attempted to improve adviser conduct and ensure they placed their clients’ interests first and that they act in a way that is consistent with the values and standards expected of a member of a profession. 

“Fairness underpins everything we do at AFCA. In assessing what is a fair resolution of any complaint, AFCA will assess whether the financial firm and its adviser have reasonably met that standard, being mindful that the interpretation of the standard is still being refined via consultation and ongoing rounds of guidance,” Dr Smith said.

“AFCA will continue to use its panel of financial advisers and consumer advocates to assist it in assessing whether financial advisers have met the standards of conduct expected of them by the community and under the Code.”

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A grossly negligent and flawed code that will ruin the industry. one must ask- who runs the country- government or a government body- the rules were to review in 21, not some arrogant self imposing and (outside parliament rules ) self righteous not authorised law making body. POLICE enforce the law NOT make the law. Wake up minister responsible and do your job otherwise you will have terminal unintended consequences on your hands.

"Fairness underpins everything we do at AFCA" hahaha yeah right. Is it right to take into account the code when you acknowledge, "that the interpretation of the standard is still being refined via consultation and ongoing rounds of guidance." What a mess

This is exactly why Minister Hume needs to stop and fix the Code right now, and Glenfield needs to stop pretending FASEA's ambiguous guidance can simply be waffled away.

Organisations like AFCA will seize upon the slightest hint in FASEA's guidance, to use as a weapon for adviser persecution.

Defer implementation until everything has been clarified using a consultative approach; fairly simple one would have thought. Some leadership from the top PLEASE.

Well that's it. Advisers basically underwrite client portfolios going forward, because no matter how well intentioned you are, a cunning lawyer at AFCA will be able to use the code to find fault in almost any situation. So the message is simply this - choose your clients very carefully and when selecting investments, be extremely cautious. Oh, and make sure you charge through the nose, because you will need to make more profit now, so you can compensate any and every client complaint, no matter how frivolous or vexatious.

Put clients in industry funds then. Ohh thats right you can't charge like a fund manager that way.

Good luck using multi-manager, hands off portfolios if you want to charge a fee to manage client super money from 1/01/2020. I can’t see how slapping someone in a default fund and charging a fee, be it fixed, % or otherwise would meet the FASEA Code.

Probably shouldn’t in that scenario. Most advisers used picked funds so they could charge and ongoing fee. In the end, if Advisers don’t get it now, they will... The only way you will be able to charge will be like lawyers accountants. For your time.

Everything is subjective. Flawed laws don't make them right. Especially when everyone knows they need fixing. How UTTERLY stupid are these different organisations using bad codes? The reason they do it is because they themselves are useless and by using someone else's flawed code, they can shift the blame. All this while decimating advisers, their business, their families, their clients, their staff, the economy and consumers in general. PLEASE SACK ALL THESE FOOLS! They do more harm to the country than the fools running it.

So my understanding of the recent updates from ASIC, Stephen Glenfield and AFCA is that ASIC will take a facilitative approach to the code but still require Advisers to adhere to the code. However, they've admitted they don't have the resources to monitor it, instead relying on licensees to monitor their advisers, but again not having the resources to monitor the licencees. Stephen Glenfield has said that the code is not set in stone but rather should be tested on a suck it and see approach for 12 months and then review it to see if it worked!! (madness) All the while AFCA, the complaints body, is going to hold Advisers to the standards set by the code when dealing with complaints, but take into account the fact that the code is still undergoing consultation, which means nothing, if you don't meet the standards you will lose every time.

The FASEA board members should be embarrassed by the outcome they've produced. The code starts in 1 month and I have no idea what I need to do to meet the standards of the Code and FASEA can't explain it clearly to anyone and the reality is, they don't even know themselves what their code means and how Advisers are meant to abide by it.

"Fairness underpins everything we do at AFCA". Procedural fairness when it comes to Advisers is given scant regard. Although AFCA say they wont respectively apply the code, they will, just apply it under another name ie. community expectations.. Lastly, when AFCA advertise on SEEK and their website for Case Managers and the first line is "customer focused", how can they be allowed to do this? A legislated body must be impartial, but you cannot be when this is the cultural set from the beginning!

Our dog's breakfast is nothing like this debacle ...and at the FPA Congress last week, its all gonna be OK people; deal with it, move on. Now let's and collaborate to design the advice profession of 2025...what!?!? On what base do you start to formulate plans for 2025 - the current position is no clearer, and you reckon you want to map out your 'blue sky'for 6 years out?

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