Not enough financial advice experience and understanding has been applied to the development of the Financial Adviser Standards and Ethics Authority (FASEA) code of ethics, according to members of the Association of Financial Advisers (AFA).
In a submission filed with FASEA just before the Christmas/New Year shutdown, the AFA warned that FASEA’s approach to the code risked creating complications because of its lack of practical appreciation of financial planning terminology.
The AFA has also urged greater application of the code to licensees, suggesting there exists a material gap between what is expected of adviser and what is expected of their licensees and urging that consideration be given to applying some standards at the licensee level.
The AFA also complained that many of the issues it had raised in its earlier submission dealing with the code had not been addressed.
“Unfortunately, it is our view that much of what we recommended, following the first version, or questions that we had raised, have not been addressed,” it said. “For a Code that will be so pivotal to the operation of the entire financial advice profession, we are very concerned at the lack of detail and clarity in terms of the requirements.”
“The feedback that we have from some of our members is that it appears that there is not enough financial advice experience and understanding being applied in the development of this Code. We believe that this is relevant with respect to both the terminology and the practicality of what has been proposed.”
“In the absence of that practical appreciation, it is more challenging to realise the complications that a few words may create,” the AFA submission said.
The AFA submission has also echoed the concerns of the Financial Planning Association (FPA) that the implementation time-frame for the code of ethics is too tight, and that more time is needed for further industry consultation to deal with shortcomings, including a perceived lack of detail of detail and explanation.