Don’t enforce Standard 3 and 6 until Treasury review

The Single Disciplinary Body should not consider any disciplinary action arising from a possible breach of Standards 3 or 6, until the Code of Ethics has been reviewed by Treasury, according to the Stockbrokers and Financial Advisers Association (SAFAA).

In its submission to Parliament on the Financial Sector Reform (Hayne Royal Commission Response – Better advice) Bill 2021, it said the Financial Adviser Standards and Ethics Authority (FASEA) Code of Ethics should be reviewed by Treasury when it became responsible for the function next year.

“SAFAA previously voiced our concern that both ASIC and the panel will become overwhelmed if all contraventions of a financial services law are captured by the regime without a materiality threshold being applied to ensure that minor and administrative breaches are either filtered out or dealt with expeditiously,” it said.

“It is important the system not become clogged with minor, technical or inadvertent breaches that would not otherwise be significant.

“SAFAA welcomes the change to the bill that provides ASIC must only convene a panel in prescribed circumstances. We hope that this ensures that the panel only deals with material matters.”

It also recommended:

• To remove the requirement for additional education and training standards for tax (financial) advisers;
• To find a solution that enabled advisers who don’t provide advice to retail clients and were not on the Financial Adviser Register (FAR) to continue to provide tax (financial advice) to wholesale clients;
• The obligation to register a financial adviser must sit for more than four years with the financial services licensee on whose behalf the adviser was authorised to provide personal advice to retail clients; and
• Membership of a professional association must be retained as a field on the FAR.