FASEA Standard 3 consultation genuine process: AFA

The Association of Financial Advisers (AFA) has said it believes the education authority’s consultation on amending Standard 3 of its code of ethics is a genuine process.

This followed earlier comments that the Financial Adviser Ethics and Standards Authority’s (FASEA’s) consultation paper suggesting it had preferred the second option it provided the industry with on changes to Standard 3.

AFA general manager for policy and professionalism, Phil Anderson, said he believed the consultation was a genuine exercise and encouraged advisers and those in the financial advice industry to make submissions.

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“Most of us would favour the first option and FASEA have provided alternatives for others to express their view on,” he said.

“There’s four weeks of consultation so we should get an outcome before the end of the year because they’ll no longer have power in 2022. They’ll need to register a change to the legislative instrument and get that legislative instrument registered by the end of the year.”

The first option given by FASEA to amend Standard 3 was: “You must only advise, refer or act where you do not have a conflict of interest or duty, being that which could reasonably be expected to induce you to act other than in the client’s best interest”.

Anderson said the AFA wanted FASEA to be clear that this would apply when there was a material conflict and not for incidental or peripheral conflict.

“In terms of the guidance, want to be very clear that it says, for example, that life insurance commission's don't invalidate that point about reasonable and inducing someone to act in a way that's inconsistent with the best interests of the client,” he said.

“It's good that they are looking at making a change, and if option one is the outcome then at least it's a much better outcome than Standard 3 as it is now as any conflict is a breach of the standard.”

Anderson noted that even if the Standard was enacted as it was currently worded there was room in the guidance to do what was currently permitted by law, which was to be paid a commission for life insurance advice as long as the advice was consistent with the best interest of the client.

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If it was genuine, FASEA would have all options on the table, including the original wording. There would be round tables with experienced, practicing financial planners. The options would also be accompanied by legal advice so it is clear to all where we stand with comms, % fees and referral arrangements. I agree advisers should lodge submissions. But let's not call this genuine consultation. It is less genuine than my fake, Chinese made Mont Blanc pen.

Good call George Orwell!!

Wishful thinking, FARSEA have proven the whole way to be massively conflicted and corrupted. Like :
- Any degree older than 10 years counts for nothing, everyone start Uni again from scratch. Imagine telling every Dr, Lawyer, Engineer etc to start Uni again as their degrees are over 10 yes old.
- ASIC paying $150k of our Adviser levies to highly conflicted so called academics in the “Paid for Comment” corrupt fiasco that is impossible Standard 3 now, that FARSEA changed from the draft with zero warning or consultation.
FARSEA deserve zero respect, zero trust and have proven to have zero Ethics.
What a disgusting FARSEA they are.

Agree Ben but we need the standard changed if we are to move forward with any white space in the regulatory framework. Technically almost every adviser is in breach of Code 3 at the moment as it is not humanly possible to engage with a client in any practical sense and not breach Code 3.

FASEA will be a case study discussed in MBA courses as an example of a failed entity, which didn't consult properly, did not engage with the industry, lacked impartiality and acted with arrogance and ignorance to the point where the government became so fed up they had no option, but to scrap the whole thing after a very short life. There is a lot for aspiring managers to learn from this failed experiment.

Wishful thinking - I doubt very much that any Uni's will be designing MBA or any courses to show how conflicted their own Uni so called academics were / are involved in the FARSEA board and the FARSEA Paid for Comment scandal.
Not gonna happen.

If you knew anything about business schools, you would know they love case studies and this one will certainly be discussed as a gross example of poor governance and a lack of engagement with stake holders. It may be ignored at Griffith Uni, but is that really the pinnacle business school? I think not.

Griffith may have come out of the FASEA debacle with more cash, but their reputation has certainly been tarnished. I would never consider employing a Griffith graduate.

Too little too late as far as I'm concerned. One last 'fling' by the FARSEA Circus before they disappear into 'never never' land. I'll be an interested observer going forward ..... if I can be bothered.

My head has been spinning for a few years now
I decided to get off this merry go round of BS and now trust in “ karma” ha ha please wake me up if and when the bus stops lost interest

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