The Financial Planning Association (FPA) is proposing new Professional Service Charging and Renewal Principles for its members, so they do not have to comply with the Government’s opt-in requirements.
The Principles are proposed as part of the Association’s new Code of Professional Practice, issued for consultation this week.
The Association’s proposed Professional Service Charging and Renewal Principles are:
- Principle 1: Professional Services – professional services can include any form of professional service able to be accessed by the member for the client
- Principle 2: Suitability of Services – services should be suitable for this client (including but not limited to consideration of usability, usefulness, duration, benefit and complexity of those services)
- Principle 3: Cost suitability – cost of services to the client should be suitable as measured by benefit (tangible and intangible) to client
- Principle 4: Transparency – originator and costs of services will be clearly identified and remuneration payable to member clearly disclosed
- Principle 5: Services must be agreed – only services that have been agreed can be charged for
- Principle 6: Confirmation at review – confirmation of services previously delivered will be provided at agreed review point
- Principle 7: Suitability review – services that have not been utilised by the client should be clarified for suitability at review point
- Principle 8: Agreement to Continuation – continuation
According to the FPA, the Future of Financial Advice (FoFA) reform legislation does not resolve the significant consumer detriment issues of a person being charged for advice services they do not receive, and will not lead to a better set of professional behaviours. Instead, the FPA says it has… ‘taken the view that we should build a better framework for service and remuneration practices in financial planning in a way that provides stronger consumer protection and is more reflective of good professional practice.’
Issued on the same day ASIC released its guidance on how it proposes to approach the approval of codes of conduct under the new FoFA reforms, the FPA says its modifications solve the challenges posed by FoFA (see: ASIC Releases Code of Conduct Guidance).
Originally launched in 2009, the FPA said its updated Code of Professional Practice takes into account the four key elements of the FoFA reforms (opt-in, the best interests duty, scaled advice and conflicted remuneration measures), as well as the criteria contained within ASIC’s consultation paper on codes of conduct.
“While the Code contains fundamental principles and standards that endure over time, it also makes sense to evolve the Code to take into account the changing environment,” said Dante De Gori, FPA General Manager, Policy and Standards.
“The modifications we are proposing will ensure that the Code is the full solution for financial planners and their clients, while standing the test of time long after the FoFA reforms are a distant memory.”
All FPA members are invited to provide their feedback on the proposed changes during the consultation period, which is to remain open until 30 November 2012. The Association says it is also developing a range of educational webinars, user guides, videos and other practical resources to support members on how to use the proposed Code of Professional Practice.
“This is a Code for all FPA members; therefore, members will have a range of ways to provide their feedback to these proposed changes given it will help shape their professional futures. In addition, we will continue our ongoing engagement with other key stakeholders such as Minister Shorten’s office, Treasury, the Opposition, ASIC, FOS, the licensee community and other consumer groups and industry associations,” Mr De Gori added.
Once again, the regulator in all their glory appear like a white knight to rescue the consumer. However, reScue them from what. The planner who charges fees or commissions for a service. That is easy to resolve. Simply be clear and concise in terms of what needs to be disclosed to satisfy the client. Not placing nonsense in front of the client to the tune of a 20 plus page statementS of advice which clients find confusing, raises costs to a practice and is constantly changing in format because yet another non thinking glorified clerk or a professional who wants to be non comMercial and practical with a need to saisfy their existance contributes another thought bubble idea.
This still does not answer anything as companies falter due to the ineptness of ASIC to regulate properly an industry with practical ideas as opposed to thought bubbles with no real idea or sense. But hey if the problems were eliminated, public servants would be out of a job. Now thats a thought worth investing in. Lets start with this government called Labor and their band of monkeys.
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