Call For More Clarity on FASEA Code Update


The AFA is still seeking greater certainty around several standards in FASEA’s updated draft of its Financial Planners & Advisers Code of Ethics 2019 Guide, says Phil Anderson the association’s General Manager Policy and Professionalism.

(Also see: FASEA Updates Guidance on Conflict of Interest.)

Anderson says clarity is still needed in several areas, including around that of scaled advice, and how advisers can provide scaled advice, with a narrow scope, when the latest guidance calls on advisers to gather sufficient information on the client to conclude that scaled advice is in the clients’ best interest.

He adds that with scaled advice the idea is that it can be done more cost effectively but advisers are impacted by uncertainty about the extent of the fact-finding they need to undertake.

Phil Anderson …licensees and advisers will err on the side of caution and collect more information than they need…

The FASEA Update says advisers “… are not expected to complete a holistic risk assessment or fact find for limited scope advice but would be expected to conduct sufficient information gathering to be satisfied the advice is in the client’s best interests as it relates to that scope”.

Anderson says licensees and advisers will err on the side of caution and collect more information than they need, which runs counter to this type of advice being more cost effective for the client.

The issue the AFA has had from the start is the broader impact on advisers and how much understanding they need of their clients’ broader situation and likely future circumstances.

Product Recommendations

Another area Anderson pointed to is that around Standard 5 which emphasises the need for advisers to ensure that advice and product recommendations are appropriate to each client’s individual circumstances.

“Advisers have a duty to be aware of available products in the market and it may be necessary for product recommendations to go beyond what is currently on a Licensees’ approved product list (APL) if the adviser is aware of a product that would be in the client’s best interests,” the latest FASEA update states.

It also points to the need for a general understanding of other well rated products.

…with so many different investment options available, how can an adviser realistically have knowledge of them all…

Anderson says that with so many different investment options available, how can an adviser realistically have knowledge of them all. He says this uncertainty makes it difficult for advisers to know exactly what is expected of them and whether they may be putting themselves at risk.

Referrals Concern

Another area of concern is around referrals and Anderson says the AFA has been asking for nearly 12 months whether it is okay to pay to receive referrals, arguing that paying for receipt of referrals should not undermine an adviser’s ability to provide advice that is in the best interests of the client.

He says the October 2019 guidance contained the assertion that advisers should be not be paid for providing a referral or pay to receive one. The December 2019 guidance acknowledged the issue required clarification.

…the industry still doesn’t have enough certainty…

Anderson says the AFA’s message is that the industry still doesn’t have enough certainty and the key issue of understanding what is acceptable and what is not, remains.

This also extends to the changed wording around conflicts of interest with the latest update extending further than the previous one and saying no forms of remuneration are banned but that advisers should “take into account that they should remain open to the possibility that certain forms of remuneration will always fail to meet the requirements of the Code of Ethics”.

Anderson says that he understands that the October 2020 guidance supplements the earlier October 2019 guide which provided a number of examples, and the December 2019 document which addressed the stakeholder feedback from the October 2019 document.

“When combined, these three documents amount to a lot of content, and some of it has a slightly different perspective on the same thing. This is going to be very challenging for the adviser population to digest and operate under,” he says.

In addition, he says the financial advice profession is waiting for Government to address how people will be held accountable, noting that the code is a legislative instrument and advisers are required to comply with it.

Click here to access the updated draft Financial Planners and Advisers Code of Ethics 2019 Guide.


  1. FARSEA, the sad joke that just keeps twisting itself in more and more knots to try to defend the Unworkable, Unreal crazy standards.
    How many guides will be provided to try to make sense of this rubbish because it still doesnt make sense in the real world.
    FARSEA have zero real world application or ability to see the real world.

  2. Well done AFA for having the courage to publicly raise these issues and when it comes down to it, for exposing FASEA’s gross ignorance and incompetence. I know it would be unfair to expect RiskInfo to run this, but I wonder if there is an organisation out there – the Beddoes institute perhaps – who will run a survey asking advisers if they believe FASEA should be abolished. The results may be something of an eye opener.

  3. We are stuck in a cycle of needing to teach the people ( FASEA ) who have no experience in the real world, that their form of Utopia has not taken into account that Commercial reality, common sense and easy to understand rules are a crucial part of the equation.

    While all the discussions continue, hundreds more advisers continue to exit the Industry.

  4. Good to see our AFA membership fees are being used wisely. Phil makes excellent points but the points could have and should have been made the second the initial draft of the Standards were released. There is massive concern stemming from the Standards and a huge one for me is that Dealer Groups are the interim monitoring bodies. Phil touches on this with a comment about erring on the side of caution, which is making it extremely difficult for advisers to feel they are complying. With multiple look back projects being conducted right now, Dealer Groups would be extremely frightened about future ASIC look backs into what their processes were to ensure their advisers were compliant with the standards, especially when there is so much confusion, so of course they are going to go overboard, which will only serve to further paralyse advisers and the industry. When completing all the study to pass the FASEA Exam (which also includes studying for Ethics & Professionalism) the conclusion was that the Standards were in some way trying to align with the Corps Act, which suggests that scoping and scaled Àdvice is encouraged and once an Adviser and the client had agreeded on a “Subject Matter”, then all the circumstances and broader effects etc relate back to the subject matter. Can’t it be that simple? There is no sense in agreeing on a subject matter and then bamboozling the client with questions and information that a. In which they clearly have no interest and b. will only make the process more unaffordable and confusing. So how would banging on about stuff where the client has no interest and adds confusion and complexity, be in the client’s best interest????

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