The Financial Adviser Standards and Ethics Authority’s (FASEA) updated guidance on its code of ethics has strict wording of the standards and the more nuanced wording of the intent and guidance are incompatible, the SMSF Association believes.
The SMSF Association said while it was supportive of the code’s intent, the authority needed to “resolve all doubt”.
The association’s chief executive, John Maroney, said: “…in our opinion, the code would be improved if many of the standards were amended to reflect the ‘intent’. Ultimately, it is only the written Code that is determinative, particularly years into the future.
“The intent of Standard 3, which references the ‘client’s best interests’ while the actual standard doesn’t, is a perfect example. Until the standards in the code of ethics are amended, the industry will continue to refer to the written Code as determinative.”
The association also called on FASEA to issue further guidance on how a financial adviser could provide single issue or scaled advice that complies with its code of ethics.
“We believe a key challenge for the advice sector is how to service clients’ advice needs that may be limited to a single issue or for scaled advice needs, for example, superannuation. This is particularly pertinent for SMSF [self-managed superannuation fund] advisers and SMSF trustees,” Maroney said.
“Therefore, we support that aspect of the guidance that says the code is not seeking to prohibit this type of advice – only to ensure that it is provided where appropriate.
“However, we believe the guidance needs to provide advisers with clarity on ‘how’ this type of advice can be provided. The way Standards 2, 5 and 6 apply practically for advisers acting under a scoped authorisation or a limited AFS licence remains unclear.”