The major advice member associations, the FPA and AFA have continued their calls for a delay in the implementation of the FASEA Ethics code, which is due to take effect on January 1 next year. With further guidance around the code resulting from recent consultations yet to be released, the argument is the lack of clarity and late guidance will make it too hard for advisers to be compliant. The recent “monitoring relief” offered to licensee’s does not change the fact that currently, advisers will still have to be code compliant at the start of next year.
The FPA head of policy and standards Ben Marshan told Financial Standard that although it was a relief to licensees that they no longer had to ensure financial planners were registered with a code monitoring body by the end of the year, it was important to be clear that compliance with the code will still be necessary from 2020 at this stage.
With time running short before the January 1 deadline, Marshan said "this creates an issue given the Financial Adviser Standards and Ethics Authority has acknowledged they need to reissue the guidance because it still isn't clear what FASEA's intent with the code is and how it should be interpreted." The FPA is seeking an extension to compliance with the code, arguing that a lack of clarity and late guidance will make it too hard for advisers to be compliant.
In addition, AFA’s general manager, Policy and Professionalism, Phil Anderson claims that FASEA has acted beyond its legislative remit, not only in terms of the code of ethics, but also with its prescribed expectations around degree qualifications. Rather than complying with the statements of the Parliament in the Explanatory Memorandum that related to the 2017 passing of the Professional Standards for Financial Advisers Bill, according to Andersons analysis - FASEA have sought to set the education standards at a much higher level. Furthermore, his analysis said “[FASEA]… are not recognising many older Diploma level courses or Continuing Professional Development as specifically referred to in the Explanatory Memorandum”
Anderson’s analysis around recognition for older diploma courses and CPD was used in response to comments by FASEA Chief Executive Stephen Glenfield, who said "We've recognised [financial advisers'] continuing professional development where you can benchmark it at bachelor level or higher." Anderson has argued that nothing in the Bill or memorandum precludes recognition at a lower than bachelor’s degree level – or includes that only CPD undertaken at the bachelor’s degree level could be counted towards the education standard," hence FASEA is acting beyond its legislative remit, because it was apparently limiting recognition of CPD only for bachelor level or higher.
There are plenty of advisers around who feel like they are being stitched up and forced to seek higher educational qualifications than they otherwise should. Conspiracies around FASEA acting inappropriately due to some affiliation with education providers and the continued confusion around the ethics code and its application do nothing to assuage many advisers feeling that they’ve been served a raw prawn. That these issues are not adequately bedded down (at least in the eyes of many advisers and the member associations), with only a few weeks to go prior to the new year add to the narrative that, in the words of one adviser – “the whole thing is a shit show and advisers who want to stay in the game have no option but to cop it”.
Advisers know that change is coming, but would argue it is common sense to delay the implementation of the code for a few months - at the very least to get better clarification to ensure they do not drift into ASIC's "litigate first" strike zone.
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Comments10
"So much for the Government reducing red tape for small business practices."
Joseph Timp 10:21 on 25 Nov 19
"Make FASEA accountable for their actions. Every Advice practice that suffers financial loss, that was caused by unreasonable demands and restriction of trade that FASEA imposes upon advice practices, then FASEA and those individuals within FASEA who have caused or been a party to this, will be held liable. There is a conflict of interest with FASEA management and the only way these leeches will let go, is when salt is rubbed onto the wounds that advisers will inflict on them when a class action is taken against the perpetrators that have allowed good advisers to be dragged through the mud and their Businesses devalued for no betterment for Australians. These fools do not care that in order to employ Australians, there must be a return for all the risk that practice owners take. Class action litigation is a growing model and there is a reason for it. If the Government and all the entities that derive their revenue from charging Business for irrelevant or non-necessary services and promote or push their agenda onto Business in a way that conflicts with the Business being able to provide a fair service to their clients, without restrictions of trade and are found to have misled the Government to push for regulation to achieve their agenda's, then as per the fallout from the Royal Commission to the Big end of town that has cost them Billions, this will be the tip of the ice-berg when tens of thousands of small Business owners take on the instigators of their Businesses being crushed. "
Jeremy Wright 14:14 on 23 Nov 19
"Everything else aside........How do you obey an ambiguous law? "
Tony 16:59 on 22 Nov 19
"Sorry everyone and I know this is controversial but I agree with Brad. Although it's disgraceful that years of experience and CPD hours suddenly count for nothing (imagine the accountants accepting this!!), unfortunately as an industry we need to accept that this is the way of the future, at least for the time being. While FASEA have recently FINALLY sought feedback from industry representative bodies and licencees, the reality is that they have their own agenda and are determined to push it through from 1/1/20 regardless of the consequences. What's really disappointing is that cost of providing quality advice will increase substantially due to mandatory processes and administration. This in turn means that fewer Australian's will be able to afford advice. Where is the benefit in this?"
Louisa 16:00 on 22 Nov 19
"The investment markets will correct downwards at some stage and clients' investment balances will go backwards. Beware somebody who has overestimated their risk profile. They and their lawyers will be after your PI Insurance and they will gladly use the FASEA Code of Ethics and Guidance against you if they can. Good luck having perfect file notes and being able to prove value for money, no conflicts of interest and that the client clearly understood the investments and the risks etc etc - all subjective stuff - defending the cases will be enough to hurt you badly. I agree with Frank - the risk to advisers of giving advice has increased substantially. My PI Insurance premium more than doubled last year - no claims ever in 25 years. I expect it will double again next year once the insurers get to grips with the FASEA Code of Ethics guidance. "
Chris 15:55 on 22 Nov 19
"So much for encouraging the over 65's to keep working longer, Josh? The one hand of Government bites the other hand"
Chris 15:39 on 22 Nov 19
"The whole situation is a damned disgrace. There ought to be a Royal Commission into FASEA! Many standards unclear & STD 3 which is unworkable, unrealistic and down right ridiculous. Conflicts exist for everyone. It’s how they are managed that is important. The law accepts them if managed and declared. Why does FASEA see themselves as above the law?? Advisers are being kicked around from pillar to post with very little say in any of this. Our pollies have a lot to answer for. The CoE should be deferred until they get the many issues sorted. "
Neville Brunton 15:30 on 22 Nov 19
"Everyone says suck it up or leave. You might want to consider what happens now , as it will determine what happens in the future. I’am lucky age 60 built the business , sold the business and looked at continuing to give advise for at least another 5 years. Have now reconsidered this due to the unstable environment and risks. 30 years planning and lots of experience as well as lots of education all wasted now and not recognised. Let’s see how you feel when you have done your 30 years and they change the rules to devalue business and say experience is worth nothing.no other industry has asked people to re do there education due to not recognising past education. I’m lucky to have choice, others will be devastated and will suffer financially or even become ill and worst still loss of life. People have feeling and it’s not about money it’s about satisfaction to both clients and planner, show me how any of this helps the clients all I see is unsettling of client, retirees facing uncertainty and clients finding a shortage of good planners. I do think that this change should resisted and the planning industry should stand up for it self and should not hang its head in shame but stand up and be counted for all the good they have done I have been proud to have been a planner and proud of how many people I have help reach there life goals. So thank all that continue to fit and up yours to those that say suck it up "
Frank 15:24 on 22 Nov 19
"Thanks Brad for your thoughtful and empathetic comment. Regrettably there will be thousands of advisers who will leave."
Paul 14:31 on 22 Nov 19
"Too late. Suck it up or leave."
Brad 13:55 on 22 Nov 19