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.
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.
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.
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