Industry bodies differ on code approach
The two major financial planning industry bodies seem to have differing views on the shape of regulator-approved codes of conduct.
The Australian Securities and Investments Commission (ASIC) has released its guidance on code of conduct approval, which included a checklist of content which would obviate the need to comply with opt-in. ASIC's guide also included an option to have a so-called "opt-in only" code.
While the Financial Planning Association (FPA) remains a strong supporter of complete sets of professional standards, the Association of Financial Advisers (AFA) claims a limited code would provide more freedom to financial planning businesses.
The FPA chief executive officer Mark Rantall said the association would apply for an opt-in specific code in April, but it plans to have the full code — which the FPA has worked on since 2009 — approved in June.
"As the professional association for financial planners, we will ultimately seek code approval by ASIC, but understand that this course may be too hard for other industry associations," he added.
However, the Association of Financial Advisers (AFA) CEO Brad Fox said the limited approach would provide more freedom for financial planning businesses.
"Limited codes do not prevent the existence of other strong, robust, comprehensive codes that do not require ASIC approval," Fox said.
He added while codes of conduct remained a cornerstone of consumer trust, the opt-in debate has painted them in a different context — as a means to avoid the law.
"There is an inherent risk in this approach — it may mean a code can potentially impose an association's preferred business model onto advisers," Fox said. "The AFA believes codes should not determine business models; this is a big issue and needs to be handled carefully."
The AFA has announced it is giving active consideration to a limited code, which relates only to opt-in.
Both associations have welcomed the release of ASIC's guidance on code of conduct approval.
"We are pleased that ASIC has provided further clarity on how an authorised representative may meet their legal obligations through obviating the need for opt-in," Fox said.
"Given that the opt-in obligation is still more than two years away from applying to clients, this clarity means that advisers and licensees can focus their attention on the far more pressing issues of compliance with fee disclosure statements and conflicted remuneration, enabling them to take the time to consider fully how they wish to be bound by a code of conduct and through which professional association."
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