Licensees cautious amid continuing FASEA code uncertainty
Licensees are urging caution on the part of their advisers because of the still-unsettled nature of the Financial Adviser Standards and Ethics Authority (FASEA) code of ethics and the reality that it will be up to nine months before the new single disciplinary body is put in place.
AdviceIQ general manager, Paul Harding-Davis said that notwithstanding the most recent code of ethics guidance issued by FASEA he held genuine concerns about how the code would be treated by lawyers in a court setting, or AFCA in a client claim.
“I appreciate that FASEA has issued the further guidance and reinforced that advisers need to make their decisions based on viewing the code as a whole, but I wonder whether lawyers will be similarly-minded or whether they will simply hone in on single issues,” he said.
Harding-Davis said he believed how the code was viewed in a contested legal environment would be important, particularly with respect to Standard 3.
Association of Financial Advisers general manager, policy and professionalism, Phil Anderson said he could understand the concerns held by licensees but believed that the danger resided in the breadth of FASEA’s admonition that decisions should be made taking the code as a whole.
“I think that makes the situation more complicated,” he said.
Anderson said that he was concerned at the delay which was attaching to the creation of the single disciplinary body in circumstances where the Australian Securities and Investments Commission (ASIC) had adopted what could be interpreted as a no action position in the interim.
He said the point was that while FASEA had issued many pages of guidance around the code, nothing had yet been contested in the context of the Australian Financial Complaints Authority (AFCA) or any other legal forum.
“One question which arises is what happens when something is compliant with the law but not compliant with the code,” Anderson said.
He said it was in these circumstances that he could understand why licensees were being careful and very risk-averse.
“They simply don’t have any certainty,” Anderson said.
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