December 3, 2019
The Australian Financial Complaints Authority has announced how it will assess adviser conduct obligations under the new Financial Adviser Code of Ethics.
Set to come into effect from 1 January 2020, the new code will be overseen by a single disciplinary body which is yet to be announced by the Government.
Speaking at the FPA 2019 Professional Congress last week, AFCA Deputy Chief Ombudsman, Dr June Smith, said AFCA will take a “…measured and considered approach to interpreting the Code’s provisions”, until the single disciplinary body is established to monitor and enforce the Code.
“AFCA will only assess adviser conduct against the Code where a complaint and the conduct has occurred after 1 January 2020,” she said.
AFCA stated it will assess adviser conduct by giving the Code its practical meaning, taking into account:
- The intention and objectives of the Code as a whole and the professional standards framework from which it is derived
- The current legislative, regulatory and professional environment within which the Code operates
- The Financial Adviser Standards and Ethics Authority’s (FASEA) guidance on the operation of the Code’s values and standards and ASIC’s expectations about steps Australian financial services licensees should take to ensure their advisers comply with the Code and specifically the guidance that they will take a facilitated compliance approach with respect to Standards 3 and 7 while FASEA continues to refine its guidance over the period up to the establishment of the single disciplinary body
“Fairness underpins everything we do at AFCA,” said Dr Smith. “In assessing what is a fair resolution of any complaint, AFCA will assess whether the financial firm and its adviser have reasonably met that standard, being mindful that the interpretation of the standard is still being refined via consultation and ongoing rounds of guidance.”
…this announcement “…provides the much needed breathing space for financial planners to calmly work through the remaining areas of uncertainty with FASEA over 2020.”
The FPA has welcomed AFCA’s statement, with CEO, Dante De Gori, saying, “Dr Smith has made it clear that AFCA will take a measured and considered approach to interpreting the Code of Ethics’ provisions until the establishment of the single disciplinary body to monitor and enforce the Code.
He added this announcement, along with ASIC’s earlier confirmation on its facilitated compliance approach to Code Standards 3 and 7, “…provides the much needed breathing space for financial planners to calmly work through the remaining areas of uncertainty with FASEA over 2020.”
The FPA stated it will continue working with AFCA on the FASEA Code of Ethics and will shortly develop further tools and resources to assist members in understanding and building compliance with the Code.