The Association of Financial Advisers (AFA) has released for discussion a draft version of a code of conduct to be adopted by its members.
The AFA says the code, called Principles of Practice, has been developed in response to recent developments (such as financial industry legislative reforms and the Global Financial Crisis) which have highlighted the need for a more professional industry.
According to AFA CEO, Richard Klipin, the Association wants to adopt a consultative approach to the development of the Principles, and says they are unlikely to be finalised until guidance on the drafting of codes of conduct has been provided by the Australian Securities and Investments Commission (ASIC) later this year.
In March 2012, the House of Representatives passed the Future of Financial Advice (FoFA) legislation with an amendment giving ASIC the power to approve codes of conduct for professional bodies, thereby exempting members of those bodies from the need to comply with the opt-in requirements.
“There is a great deal of uncertainty as to what the implications of this (opt-in) announcement are and what a code might need to contain in order to get an exemption,” Mr Klipin said in an email to members.
“Some groups have wrongly assumed that opt-in is no longer an issue for the industry.
“What has been made clear since this time is that the code would need to be comprehensive, positioned at a level above the law and involve an obligation to service clients akin to the opt-in obligation,” Mr Klipin said.
The draft Principles of Practice have been released to members as part of a broader consulation paper on professional standards. The AFA says the Principles contained within the paper are not designed with the intent of meeting the likely ASIC requirements, but are intended to establish a dialogue with members.
Key elements of the Principles will also be discussed at the AFA’s July Roadshow, commencing in Hobart this week.
AFA members are invited to make a submission in response to the code by 31 August 2012. To view the consultation paper, click here.
