Advisers have delivered a sceptical welcome to the Financial Adviser Standards and Ethics Authority’s (FASEA) release of the draft code of conduct resulting from its industry consultation process.
The draft code, released on Monday, resulted from FASEA’s consultation with key industry stakeholders over the past 12 months but initial feedback delivered by advisers to Money Management suggests that they remain suspicious of the process.
However, the new draft code does seek to create greater clarity around key issues and particularly with respect to the contentious Standard 3.
One problem for advisers is that they or their licensees have less than a month to respond with submissions due to close on 2 November.
The draft also seeks to bring greater clarity around the treatment of clients and referral arrangements between accountants and advisers, the status of referral fees and the issue of which clients can and cannot be regarded as wholesale clients.
However, while there are some clearer explanations, Standard 3 looks likely to remain the subject of significant debate within the financial planning industry in circumstances where on the one hand it says that it does not preclude any particular form of remuneration but, elsewhere, states; “certain forms of remuneration will always fail to meet the requirements of the Code of Ethics.
“Advisers will not breach Standard 3 merely by being a duly remunerated employee of an entity that lawfully provides retail financial advice and services, provided the provision of that advice services is in the best interests of the client and complies with the other provisions of the Code,” it said.
Stakeholders have until 2 November, this year, to respond to the draft code.
