Financial planning groups will meet today with the Financial Adviser Standards and Ethics Authority (FASEA) in an attempt to gain clarity around the code of ethics, with the Association of Financial Advisers (AFA) calling for a delay in the code’s implementation if key issues can’t be resolved.
AFA general manager of policy and professionalism, Phil Anderson has reinforced to Money Management that time is running out to fix some very vexed issues in circumstances where the code is scheduled to be implemented from 1 January.
He said that in the absence of such a resolution of key issues, particularly around Standard 3, the AFA would be advocating to the Government for a delay in the implementation of the code in circumstances where advisers would be faced with significant risks of breaking the law and undermining their livelihoods.
“We are desperately short of time and we need clarity on these issues,” Anderson said.
The AFA has made clear in a communication to members that it has particular issues around Standard 3 and particularly its impact on asset-based fees and all forms of commissions.
It claimed that, unless addressed, the FASEA code could place up to 57% of financial adviser practice income at risk.
“The Code prepared by FASEA, has the potential to fundamentally change the way financial advice is practiced. It appears that the FASEA Board have chosen to use this as an opportunity to rewrite the law,” Anderson said in his communication to AFA members.
“As a result, the entire financial advice sector is left completely uncertain as to what will be permitted under the Code and what will not, with less than two months until commencement and no obvious way to fix this problem.”
“With all forms of commissions and asset-based fees now in doubt, 57% of financial adviser practice income is at risk, as a result of this version of the Code of Ethics. This will impact both financial advisers, but also their clients, who might be forced to change their adviser’s remuneration arrangements at very short notice.”