Financial advisers need to be more concerned about the Financial Adviser Standards and Ethics Authority’s (FASEA’s) consultation on a new code of ethics considering that it will bind them, according to wealthdigital.
All financial advisers would need to abide by the code by the beginning of 2020. They also would need to choose a body to monitor their compliance with the code, which would have the ability to sanction them.
wealthdigital technical manager, Rob Lavery, said advisers should make submissions on the code to FASEA, discussion of which had been somewhat lost amongst the authority’s broader reforms.
“This code will be more than the subject of compulsory study. It will be an enforceable set of standards that advisers will have to abide by. The time to help mould this important element of industry governance is now,” he said.
“Not only will advisers need to adhere to the best interests duty, disclosure requirements and other black-and-white legal obligations, they will also have act in accordance with this less prescriptive code of ethics.”
Lavery also pointed out some issues with the current proposals.
He questioned the requirement that advisers “act in accordance with the spirit of all laws and regulations”, saying that it was a “broad” concept that was difficult to determine.
He called on advisers to question it while they had the opportunity to do so.
Secondly, Lavery was sceptical about the proposed requirement that advisers hold each other accountable for the protection of the public interest.
“Will this prevent unethical behaviour by requiring good people to say something, or will it engender mistrust between industry colleagues?” he asked.
“It is another standard that should be discussed by those in the advice industry.”
The consultation period on the ethics code would be open until 1 June, this year.