AFA News 5 November 2020. On Monday 2 November 2020, the AFA made a submission to FASEA in response to their latest Code of Ethics Guidance. This Guide follows earlier documents released in October 2019 and December 2019, and is intended to provide additional information on the intent of each standard and how to apply the standard.
In our submission, we have continued to highlight a number of issues with the practicality of the Code of Ethics and ongoing confusion and uncertainty about the implications for financial advice businesses. In addition to our previously stated concerns about the unworkable nature of Standard 3, which seeks to ban all conflicts of interest and duty, and the lack of clarity with respect to the requirements under Standard 7, which relates to remuneration, we have also raised substantial concerns about the guidance on Standard 4 and the expectation to obtain consent from existing clients. This has caused substantial confusion and anxiety, particularly amongst risk advisers, based upon the potential requirement to obtain consent for all existing clients. We have strongly challenged the premise of what FASEA has proposed.
In support of our submission, we have also included a letter that we prepared in October 2019, along with the FPA, as part of our joint taskforce on life insurance. In this joint letter, we called on FASEA to treat this consent from existing clients requirement differently for life insurance clients, setting out the reasons why life insurance business cannot be treated the same as investment and superannuation business.
We are aware that this latest Guide from FASEA, and in particular the commentary around Standard 4, has caused a great deal of concern for many advisers. At this stage it is a draft and of course the ASIC facilitative compliance approach remains in place for Standards 3 and 7.
We, like all financial advice sector participants, want this to work, however, we will continue to argue passionately against measures that threaten financial advice businesses, while at the same time providing no client benefit.
Please provide any feedback on the latest FASEA Code of Ethics Guide or the AFA submission to FASEA at policy@afa.asn.au.
Issued 05.11.2020. AFA Policy & Education Update
