FASEA standards trump other codes if stricter
The Financial Adviser Standards and Ethics Authority (FASEA) code of ethics’ controversial Standard 3 is stricter than its Tax Practitioners Board (TPB) code’s equivalent and tax financial advisers need to be aware of the similarities and differences of both codes, the board has said.
TPB board member, Julie Berry, spoke at the SMSF Association National Conference and said tax financial advisers would not be able abide by the TPB’s Code Item 5 on conflicts of interest as FASEA’s Standard 3 was stricter and all relevant providers needed to comply with both codes.
TPB Code Item 5 stated that providers “must have in place adequate arrangements to manage conflicts of interest”.
“In cases where there are conflicts anticipated you must take steps to control or avoid or disclose conflict,” Berry said.
“If a conflict is disclosed to all parties and authority to proceed is given then according to our code you can continue to act providing you have adequate arrangements in place to manage the conflict. But FASEA’s position is very different.”
FASEA’s Standard 3 stated that the adviser must not act, advise or refer with a conflict of interest or duty.
“That effectively means that FASEA’s requirements are stricter because it says you can’t act even if it can be managed,” Berry said.
“There is still a lot of clarity being sought around this and associations have lobbied hard for more clarity.
“I would suggest if you’re looking to participate in any new referrals or anything it must abide with the new code. Whilst the TPB have more flexible with the existing arrangements I don’t think we can get so much leeway on the new ones.”
Berry noted that the TPB was looking to expand its sanction powers to provide more effective action on providers that breached its code.
She said these powers could expand to infringement notices, enforceable undertakings, interim and immediate suspensions, and lifetime bans.
Currently, bans only had a maximum of five years.
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
