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
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
