The Institute of Managed Account Professionals (IMAP) has added its voice to the chorus of voices telling the Financial Adviser Standards and Ethics Authority (FASEA) it needs to address Standard 3 of the Code of Ethics.
IMAP has confirmed that it has lodged a nine-page letter with FASEA chief executive, Stephen Glenfield identifying key problems with the code.
Those problems were:
- The conflict between certain standards and established law and regulatory policy;
- Inconsistency between the Code and FASEA’s guidance, particularly in relation to the way a Code Monitoring Body may adjudicate a matter under the terms of Standard 3;
- Inconsistency in the manner in which the Code must be applied between members of the advice profession; and
- The lack of a materiality test.
In sending the letter, IMAP has joined a long list of industry participant organisations concerned about the code and, in particular, Standard 3.
IMAP’s outline of its concerns comes just a week after the gazetting of FASEA answers to Senate Estimates revealed that the development of the code had been the result of consultations and input from “the collective skills of management and directors”.
In a communication to IMAP members, the organisation’s chairman, Toby Potter said that in sending the letter, “we wanted to set out IMAP’s position, particularly on Standard 3 of the FASEA Code of Ethics, which we believe is structurally flawed”.
“Importantly, we think it appropriate to note the differences between Standard 3 and the way in which conflicts are required to be addressed by other professions, like law and accounting, which have had considerably longer experience in addressing this issue.”
The IMAP Regulatory Group is seeking a review of Standard 3, which it believes is not only important for professionals working in the managed accounts sector, but for all financial advisers.
“Standard 3, as it currently sits, imposes a significant burden on the provision of advice. It contradicts another standard in the FASEA Code of Ethics, as well as established law,” Potter said.