FASEA Criticised for Lack of Consultation

The Financial Planning Association of Australia has criticised FASEA for its lack of consultation with financial planners on the Code of Ethics and Guidance, with less than 50 business days until the Code is due to commence.

FPA CEO, Dante De Gori …less than 50 business days before the Code is due to come into effect

The FPA also called out the Guidance to the Code, claiming that the document raises more questions than it answers.

“With less than 50 business days before the Code is due to come into effect, FASEA has completely failed both in their obligation to consult and to provide clear guidance on how its standards will work in practice,” said FPA CEO Dante De Gori.

“The process has again been greatly disappointing and completely inadequate, which has produced guidance that is confusing, out of touch and at odds with existing financial planning laws and standards.”

FASEA made an announcement on the same day as the FPA released its criticisms late last week, confirming the first consultation with designated representatives of consumer, professional, education and other industry groups will commence on 12 November 2019.

“The purpose of these sessions is to provide opportunity for consultation on the practical elements of the Code, and to communicate and explain the integrated nature of the Code,” it stated, noting the consultation will continue throughout the following month.

FASEA stated that it wrote to industry professional stakeholders on 22 October 2019, inviting participation in the Consultation, outlining the following:

To coincide with the release of the Guidance, FASEA will hold a series of consultation briefing sessions with stakeholders to share FASEA’s Guidance on the COE (with particular emphasis on the integrated nature of the Code), how it is expected to be operationalised and how to use the COE Guidance as a tool to facilitate understanding of the practical application of the Code.

“Financial planners and even the public are confused about which standards should be followed…”

It is intended FASEA will present an overview to stakeholder participants and workshop a number of examples in the Guidance to assist stakeholders to have a consistent understanding of the operation of the Code and its impact on advisers.

It is proposed stakeholder participants will have the opportunity to discuss the presentation and to provide their consultation feedback on the Guidance.

The FPA also stated FASEA’s Code clashes with the Government’s Royal Commission Road Map, released two months ago, and the grandfathered commissions legislation passed by the Parliament a few weeks ago.

“Financial planners and even the public are confused about which standards should be followed – those in the Code of Ethics set by FASEA or those in corporations law set by the Australian Parliament,” said De Gori.

The FPA stated that it is time for the Government to step in and to recognise that FASEA has failed to deliver its mandate to consult and deliver, this time with the Code of Ethics and accompanying Guidance.

  • FASEA has been given an impossible mandate – eliminate conflicts of interest in its code of ethics while the conflict of product providers employing advisers is explicitly allowed to continue. That cannot be resolved.

    The issue raised in this article on a strict reading is simpler. It can be sorted through a simple clarification – that life insurance commissions and asset-based fees do not fall foul of this standard.

    • Concerned

      Good points Christoph. At a higher level, it is yet another example where there is no clear understanding of the many bodies now involved in this entire fiasco. Each of the respective bodies seems to be operating independantly of each other resulting in, for example as it has been highlighted above, confusion between FASEA’s code and that contained in the Corporations Law. This mess has now gotten out of hand. It is correct for the FPA to state it is time for the govt to step in, etc. The problem however, is that the govt has no idea. As I have said repeatedly, the AFA, and now the FPA, executives from the retail life insurers, even the dealer groups, must go to the govt collectively and stress that commissions must be reinstated at least to 80% levels, the 2 year clawback must be abolished and this FASEA fiasco must be addressed by people who actually understand the industry.

  • Squeaky_1

    I suppose I am watching all this nonsense with a strange detached bemusement. I hesitate to say “bemusement” as I know how hard this is for many advisers. It would be hard for me too, if I was to elect to stay in the ‘industry’. I’m 58 and a while back I chose to be a risk specialist. I’m a fully qualified planner but enjoy and believe strongly in the place of risk management in a client’s portfolio. I had all good plans to continue for as long as my good health would let me – 70+, no problems. However I am dismayed, disappointed and, frankly disgusted at the life companies, politicians and vested interest special interest groups (we all know them) and the way they ALL sold advisers up the creek with LIF (commissions and responsibility periods). The FPA and AFA should be abjectly ashamed of themselves that it has all gone this far.
    .
    I am not in the least concerned about study for these wholly unnecessary exams (for me as a riskie) as I will not be doing any of them. I refuse to do this idiocy. Why would I? TENS OF THOUSANDS OF DOLLARS of mine and untold hours away from family, business and clients into the coffers of self absorbed universities for these ‘courses’ and extraneous exams. For what? All of it will be of ZERO help to me or my clients in the management of their life, trauma and income protection advice. Is FASEA (or anybody) telling me I need more education about FP to help clients with simple risk products at great expense. It is like doctors being told they need to upskill to neurosurgery level – patently ridiculous. These paid-for govt clerks are going to destroy our once great industry, mark my words fellow advisers. FASEA et al would have me study and pay a billion bucks to learn about derivatives, international currency exchange rates, CDs and all manner of high level complex financial planning.
    .
    I’ve never taken a fee from a client in all my 35 years in the industry. I have ALWAYS been completely transparent with clients in conversations about how I get paid and how commissions work. My clients are ALL happy to work with me under the commission basis. Way before SoAs and CARs I had the conversations with clients – nothing new for me. What is new is this ridiculous over the top compliance and exam system that will be the reason for me leaving my precious clients decades ahead of time. I’ll be OK -n sell my client base and retire very nicely than you. But it didn’t have to be this way and, again, I’m disgusted that the above mentioned entities have made it so.
    .
    The life companies are in for a rude awakening – take it from someone who has watched and worked with them intimately for 35 years. There’s hardly a single executive today that doesn’t believe life cover will sell itself using Roboadvice. They want advisers gone to save on commissions – but we can easily see the outworking of that currently with their success in lowering coms and extending claw-back in LIF. These duplicitous life companies cannot be trusted on any level. Hold that thought as it will possibly save you some angst as you travel forward. See you on the other side . . .