Specialist financial services law firm, The Fold has suggested that the Financial Adviser Standards and Ethics Authority (FASEA) code of ethics is in a virtual no man’s land.
Lawyer Simon Carrodus has noted even though the Code came into effect on 1 January, the consultation process around that code is not yet complete and that, at the same time, the Australian Securities and Investments Commission (ASIC) has made it clear it is not the regulator’s role to enforce the code.
“Even though the Code came into effect on 1 January, the consultation process is not yet complete. In late 2019, FASEA conducted consultation sessions and accepted submissions from licensees, educational and industry bodies, advisers and consumer groups,” Carrodus wrote. “Many hoped this process would result in a re-drafted Code that would clarify the major points of confusion. Second on the wish list was a re-drafted guidance document. No such luck.”
“Instead, we have a ‘preliminary response to the submissions’ (i.e. more guidance) and the promise of a ‘further detailed response’ later in 2020.
“We are in a phase of ‘facilitative compliance’. This means that no regulatory action will be taken provided licensees take reasonable steps to ensure their advisers comply with the Code. This means licensees should:
- Review their policies;
- Update systems;
- Provide training and guidance about the Code; and
- Monitor their adviser’s compliance with the Code.”
Carrodus said he believed this was in recognition of, as ASIC put it, “…the timing of the guidance provided by FASEA… and the evolving industry understanding about the meaning and implications of the Code.
“In other words, the Code is technically in effect but it’s in such a state of flux that it would be unfair to punish an adviser for not complying with it,” he said.
Comments
The Fold are absolutely spot on. What a shambles this whole process has been. The FASEA Board should be sacked for failure to meet their own KPIs (if they have any that is). And on another matter that MM has written about, the FASEA Exam is also a mess. Who the hell is writing the questions and who at FASEA are signing these off as acceptable? I had a fellow planner call me the other night after sitting the exam and he was livid!! He's done plenty of prior study at Uni, DFP, CFP and more recently the Ethics bridging course. He said many of the questions were ambiguous and written in such a way that he said were "disrespectful" of planners. It's time for the Minister to start taking some serious action. Whilst I understand it's only the big banks paying for FASEA's existence, that's irrespective to an industry that's paying "fees for no service" wrt all things FASEA.
And I guess this is progress? What a mess.
The headline should actually read,
"Is the Code of Ethics the Goose that lays the golden eggs for lawyers".
They wanted the licences to do it, which is , oh, that's right where we were originally!!
I fear that it is all too late and once many leave the positions will not be filled. The amount of bad press vs good press is not balanced and unfortunately, the news likes to have bad news stories.
The board needs to be sacked immediately. Delaying the exam will not make this problem go away, The opposition has finally cottoned on to the FASEA debacle. The fact is, everything they have touched is flawed and it is only a matter of before before the mainstream media get wind of the story that is brewing. FASEA has virtually zero support within the adviser community, even though most of us support the intention behind FASEA. The big mistake was stacking the board with professional board hoppers with no experience in financial planning. I have no issue with a consumer representative, an ethicist, an academic and other experienced people on the board. But the majority should be experienced, practicing financial advisers. That's the big mistake Kelly O'Dwyer made. She gave absolute power to a bunch of people, most of whom have little (if any) knowledge, experience or interest in our profession; and given they way they have gone about things, one can only assume they are delighting in the opportunity to steamroll our profession and look tough, so they can make a name for themselves, to improve their resume for their next gig.
A dog's, breakfast, an unworkable pile of fettid crap that adds no value to clients and is designed to destroy the profession. A complete shambles overseen by a shameful organisation: FASEA.
FASEA was stacked with consumer advocates and left wing legal activists with ideological positions.
They would have had zero concern for the impact on advisers or licensees and strangely enough...the consumers themselves.
They would also have been under significant pressure to just "get something out" irrespective of whether the consultative process was complete or not.
ASIC would have been up them like a rat up a drain pipe, even though they have currently stepped back from any overseeing role, they would have wanted yet another constraint by which to hang someone if they needed to.
Mismanaged, misaligned, and a mistake.
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