FOI documents reveal ASIC’s involvement in FASEA code

26 June 2020

Documents obtained under Freedom of Information (FOI) have confirmed the intense consultation which occurred between the Financial Adviser Standards and Ethics Authority (FASEA) and the Australian Securities and Investments Commission (ASIC) in the development of the final FASEA code of ethics. 

The documents, provided to Money Management, cover a nearly 12-month period and make clear that ASIC’s views on the shape of the code were significantly accommodated by FASEA particularly with respect to examples and guidance. 

However, in its communications with FASEA, ASIC made clear that it did not want its work on the code of ethics attributed to it. 

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In an e-mail dated 8 November, 2018, dealing with ASIC guidance around ethical behaviour, ASIC senior specialist, financial advisers, Leah Sciacca wrote: “Attached is a document containing some further thinking/ideas on the examples we discussed on the phone. I confirm that ASIC provides this document to FASEA on the basis that it may assist FASEA prepare its guidance and the examples it wishes to include”. 

“Additionally, while we are happy to look over the final FASEA examples, we are not able to approve or endorse them, nor should they be attributed in any way to ASIC, as it is for FASEA to determine whether they achieve the desired purpose.” 

The documents obtained under FOI reveal that FASEA kept in close contact with ASIC seeking its feedback on key elements of its code of ethics approach from April/May 2018 all the way through to early 2019 in circumstances where FASEA released its Code of Ethics Standard on 11 February, 2019. 

The close consultation with ASIC over the development of the code revealed in the FOI documents stands against the background of a FASEA response to a question from South Australian Senate cross-bencher, Rex Patrick, during Senate Estimates, around how the code had been developed. 

The FASEA response stated: “The board of FASEA determined to make the code of ethics on 8 February, 2019. As part of its decision-making process for determining to make the code of ethics, the board received and gave due consideration to a range of matters including:  

  • Input from the collective skills of management and directors;  
  • Feedback from stakeholders received from two rounds of public consultation in March-June 2018 and November-December 2018; and  
  • Review and analysis of stakeholder feedback.” 




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Well done Mike, great investigative journalism. Would be interesting what other secrets ASIC are hiding. Any chance you could attain their 'gifts' register for the last few years, or how much they unofficially 'consult' with Industry Super, Choice or Labor?

Nice to see some old style sleuthing Mike. Excellent work.

Takes me back to the AMP audit report highlighted during the RC

Thanks Mike. So what this new information proves that ASIC were complicit in the mess that is the Code of Ethics. And we thought it was only FASEA's fault. Thank God neither are in charge of COVID-19 responses.
Two things come to mind:
1. "Dumb & Dumber" the movie
2. "The blind leading the blind" the quote

It would be even more interesting if ASIC provided FASEA with guidance on specific examples of Best Interest Duties as well. And the 10 different legislative definitions on what that might be.

For organisations who preach the mantra of transparency this stinks of hypocrisy.
Stds are applied to advisors that others consistently breach.
We are subject to a regulatory regime founded on ideology.
Yet if any other profession was subject to the scrutiny we are they would fail miserably.
Look at medicine - malpractice and incompetence, covered up yet riff.
Look at law - absolutely no transparency, fees that do not represent value for money, behaviour certainly not always in client's best interests
Look at politicians - absolutely scandal plagued, making decisions on matters with absolutely no understanding of the issues and implications.

Hmm...bit like a jockey taking riding instructions from trainer - when the horse-rider should be directing the horse wherever it should truly go

Bang !!!!!....and there you go.
This well and truly defines why Stephen Glenfield was not going to answer Senator Amanda Stoker's questions in the Senate Economics Legislation Committee in Oct 2019 when asked what ASIC's submissions to FASEA said.
Stephen Glenfield could not recall what ASIC said and took the question on notice.
Stephen Glenfield stated " ASIC made submissions on all of our standards we put out for consultation".
But what he was referring to was only the public submissions and did not provide explanation of the regular and significant involvement that ASIC had directly away from the public submissions with FASEA in regard to the Code of Ethics.
Not only that, it is now clear that ASIC had regular input, but made it clear it did not want to be identified as attributing to the final outcome.
Glenfield's answer to Senator Stoker's questions which took forever to become available stated that
" ASIC made submissions to both the March 2018 and November 2018 FASEA public consultations on the draft Financial Planners and Advisers Code of Ethics".
Across these 2 dates ASIC submissions made no less than 27 separate comments, recommendations and suggestions in regard to their interpretation of the standards, the wording and applications of same.
As part of their March 2018 submission, ASIC made specific commentary regarding Standard 3.
" We agree with the principle expressed in this standard. However, we think some further guidance about it's scope(eg. in the form of examples of the kind of conduct that would fall outside this standard) would best encourage improved behaviour by financial advisers.
We query whether " and as an independently minded professional" is a necessary addition to the standard. It appears to mean something different from acting with "personal integrity". Should it be identified in a separate standard? "
In this March 2018 ASIC submission, they also make detailed commentary and recommendation regarding sanctions.
" We note the code does not set out any sanctions for breaches of the code."....
" We ENCOURAGE FASEA to consider setting out sanctions and the code breaches for which FASEA would expect different sanctions to apply in the final version of the code".
This evidence brings into focus the long held suspicion that ASIC may have had significant input in regard to the re-wording of Standard 3 and the inclusion of the variable income clause, effectively using a potential breach of Standard 3 based on inducement to act, in order to eliminate commission from risk insurance and asset based fees.
This now also places questions as to involvement of other organisations such as Choice away from the public submission process and was FASEA in contact with and negotiations with these organisations in relation to the wording and structure of the COE ?
It is becoming much clearer that the process FASEA has engaged in to arrive at an unworkable framework, may well have been influenced by the involvement of third parties.
In a bizarre twist, the conflicts of interests put forward by third parties may well have had significant effect on the production of a document designed to eliminate conflicts.
Minister Jane Hume is now obliged to investigate this matter further.

So based on this, Advisers probably had no say in defining the CoE. No wonder its unworkable being based on ideology of a select few, none of whom have any idea of what its like to provide advice.

Well done Mike.
This is some serious stuff. I'm not sure what the legal definition or corruption or behind the scenes undisclosed deals is but I know the smell.
Really make you wonder what ASIC is hiding in that undisclosed "Gift" register that they refuse to release? Seriously, what are they hiding?

Mr Glenfield allowed his inner distaste for advisers come out in the ABC interview, he had decided advisers had no right in framing its own direction, an inability to self govern. But it was the way he spat the words out that were the interesting part. So this document comes as no surprise, advisers were never at the table in this discussion.

Great work Mike!
What to do with this new information? It's only worthwhile if it can be used and followed up. Should be emailed to Senator Stoker and every other politician. This needs to be escalated and not left to wither.

So misleading and deceptive conduct by both the corporate regulator and an ethical standards body !! Hence the article thereafter "Adviser Exodus Continues" as a no confidence motion by practitioners.
This begs the question what is the government going to do to bring them to account and its so called position in supporting small business and cutting red tape to get the economy moving again.
We are all questioning whether their will be a profession that can feasibily assist and benefit Australians both big and small that require and need advice. At the moment small clients are being kicked to the gutter and with the banks having exited the small business practitioners bearing the brunt for the sins of the corporates.

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