Parliamentarian demands FASEA Standard 3 clarity

A Government backbencher has complained that it will be impossible to determine why the Financial Adviser Standards and Ethics Authority (FASEA) changed Standard 3 of its code of ethics in the absence of all relevant submissions being made public on the authority’s website.

Queensland Liberal Senator, Amanda Stoker used Senate Estimates to ask FASEA chief executive, Stephen Glenfield why the authority had not released any of the submissions it had received through the consultation exercises around the code of ethics.

In doing so, she pointed to the fact that she had first raised the issue a year earlier in October, last year.

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“You took that question on notice, and when you responded, you advised that you had listed the names of the submitters on your website and noted that ‘FASEA is reviewing its ability to create links to lodged submissions or otherwise make them publicly available’,” she said.

“I see that you now have that functionality, and you have released the submissions that you received in response to the ‘Financial Planners and Advisers Code of Ethics 2019 Guidance’ document that you issued in October 2019, however you have still not released the submissions that you received on the consultation exercise that led to the finalisation of the code of ethics.”

“It is now a year later, and these submissions have still not been released and we are all still none the wiser as to why you made that significant change to Standard 3 prior to it being issued in February last year.  Why haven’t these submissions on the code of ethics been released?”

Glenfield responded that the submissions were available on the FASEA website and repeated that assertion when challenged on the issue by Stoker.

Stoker then asked Glenfield to provide her with the links to the submission.

A search of the FASEA website late on Wednesday could not locate any submissions other than those referenced by Stoker.




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Comments

Comments

FARSEAcal continues ALL its Unethical Conflicted secretive processes.
The fact these so called Ethical Gods act so Unethically is beyond hypocritical !!!!!!!
Drain the SWAMP - FARSEA and ASIC need a complete clean out from Top to Bottom.

FASEA Standard 3 is unworkable because it precludes all conflicts. Ultimately all commercial advice (including fee for service) has some element of conflict. Standard 3 has been designed to allow biased regulators to pick and choose which advisers and which forms of advice they will persecute, using Standard 3's "catch all" powers. No wonder Glenfield is trying to hide the truth.

Standard 3 needs to be amended immediately to say that any conflicts must be MANAGED in the best interest of the client. It is completely unworkable to say that all conflicts must be avoided. It doesn't matter what FASEA's "guidance" says, as FASEA doesn't enforce the Code. Other regulators will use the Code as a judgement and enforcement tool, and too many of our regulators have ingrained bias and prejudice against financial advisers.

Here we go round the mulberry bush
The mulberry bush, the mulberry bush
Here we go round the mulberry bush
So early in the morning

More obfuscation by FASEA. They should be required to publicise ALL submissions on ALL of the Standards. Then we will really see how much notice they took of feedback. If you read FASEA's statement to the Senate Estimates Committee (released yesterday), you'd think life is a bed of roses with everyone happy with FASEA and that they listened to the "consultation" in developing the updated guidance. The phrase "tin ear" comes to mind.

FARCE-IA should be embarrassed and abjectly ashamed of their deplorable behaviour in this and most other endeavours in which they have been 'involved'. Every single activity in which they involve themselves screams of an unruly collection of clowns struggling for relevance and attention to justify their taxpayer handout of pay each week. This clown-like travesty called FARCE-IA, who clearly have no clue or ethical compass, to which advisers and clients are not only being subjected but also having to PAY wages for their idiocies, have no place in serious reform of our once-great industry. They and the heavily conflicted ASIC should in all good social conscience be defunded and disbanded for the good of the wider community. Only then can we have non-conflicted and independent industry reform. Everything else is a waste of time, money, ethics and sanity until that happens.

The reason is that ASIC was in constant discussions via email and phone to FASEA during the submission period and they exerted influence on FASEA to alter Standard 3 to include the variable income clause for the specific purpose of placing significant pressure and focus on asset based fees and insurance commissions. The reason for this is that ASIC have an inherent bias against these forms of remuneration and they were utilising the potential breaches of Standard 3 over time to influence the abolition of both asset based fees and insurance commissions.
The " Other sources of variable income" clause clearly states " You WILL breach"........it does not state " You MAY breach"...........
It is entirely subjective and is designed to capture a situation where the proving of an inducement provided to an adviser is as simple as shooting fish in a barrel.
If a "disinterested" person was to simply conclude that the adviser was attracted to the inducement of the client's asset value increasing and therefore would receive an increased level of remuneration as a result, then it would be considered a breach.
What if the client's investment balance decreased significantly as a result of negative market movement such as the March period this year and the adviser remuneration also significantly decreased during this period resulting in the client paying significantly less in adviser fees during this negative period ?....Is this still a breach of Standard 3 ??
Would this be considered in the client's best interest to be paying less of their capital in advice fees even though they were most likely receiving a greater level of advice and contact during a challenging period ?
There has no doubt been persistent intervention from ASIC and FASEA and Glenfield have stumbled and fumbled their way through this because they don't want to disclose the level of intervention and influence.
This is a stitch up.

There is a growing realisation by a number of Parliamentarians that these independent agencies are actually totally unaccountable, & need to be shut down & brought back under full ministerial accountability. We have been sold a pup. Watch this space.

I wonder if that’s the best outcome long term though? Certainly in the short term it needs to be wiped clean, but I like the idea of having a body that theoretically doesn’t change its spots too much based on the colour of the party running the show.

FASEA and all its codes seriously? Most Advisers cant recall the steps of the best interest duty. I doubt they would remember the any of safe harbour provisions. Now we have hours and hours of ethics based nonsense, which just treat us like kids at kindergarten. This industry is farcical.

Maybe FASEA need to issue a guide to their guide and then a guide to their guide to the guide etc etc.

Under the ASIC Reg Guide 175, whatever the client thinks is in their best interest, IS their best interest. So much for professional advice then. Not unlike a patient looking up Dr Google for health advice, rather than going to their GP

Dear Steve, could you please elaborate? It raises an interesting dilemma. Which best interest is the higher legal requirement. ASIC or FASEA?

There is about 8 references to Best Interest in legislation. None of which has been defined in law by the Courts. And the Senior Cousels know it. It's out of control

Correct, there is no clear definition, hence the no win no fee lawyers just sit and wait to pounc

thanks for responding

What is the issue with lying to a Parliamentary review??? After all ASIC has shown that ethics and accountability are only required when the Auditor General reports you, and even then you still get paid while you wait for the report to be investigated....

They need to examine the role ASIC played in this. Were they exerting influence on FASEA? Is there an email chain between the two. This whole thing stinks anyway. What an absolute mess.

I would say there is much to hide - the excuses provide by FASEA - really, can't make a link, and then a year later to say it is there when it isn't. Looks like FASEA expected the committee to simply forget and move on - but luckily she has not.
Very interest.

ASIC made submissions to both the March 2018 and November 2018 FASEA public consultations on the draft Financial Planners and Advisers Code of Ethics.
These submissions can be found under the Senate Economics Legislation Committee ( Answers to Questions on Notice) Question No: SBT44 Reference Hansard page 112 (23rd Oct 2019).
What we don't know is how many emails, phone discussions and other contacts were made between ASIC and FASEA during this whole process.

Looks like the ethics of FASEA will prevent any of this information ever being made public.

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