The Financial Planning Association has updated its Professional Code from a rules-based system to a principles-based one, after extensive member consultation.
A statement from the association says the updated code will support its members “…in continuing to uphold the highest standards in their dealings with clients, other professionals, and regulators.”
The critical change to the code has been structural, moving from a lengthy and complex rules-based system for regulating member conduct to a one-page, principles-based Professional Code, “…emphasising the importance and primacy of professional judgement.”
Cutting more than 20,000 words from its previous rules-based system, the 10 principles of the FPA Code are organised under three pillars: Being, Knowing and Doing.
- Under ‘Being’, the FPA Code outlines the principles of putting the client first, integrity, objectivity, and fairness
- The ‘Knowing’ principles are skills and knowledge, and continued professional development
- The principles under ‘Doing’ cover professional behaviour, competence, diligence, and confidentiality and data protection.
…members must be placing the client’s interests first…
The association says a key element underpinning the Code is that members must be “…placing the client’s interests first, in line with the requirements of relevant laws and regulations, [as] is a hallmark of professionalism.”
Another important requirement is that members’ actions “…are aligned with promoting a culture that supports and requires integrity in others.”
FPA Chief Executive Officer, Sarah Abood, says this is particularly important as it goes beyond acting ethically between members and their clients, also applying the standards to their organisation and the wider profession.
Highlighting that Ethical Principles Apply at all Levels
“We included promoting a culture of integrity in the code to highlight that ethical principles apply at all levels, including those in senior positions who have the most influence over the culture of their organisation – not only client-facing practitioners,” Abood says.
She adds that this issue was raised by members during consultation on the new Code, who feel strongly that it’s important that ethical behaviour is supported at all levels of an organisation.
The FPA’s move to principles-based regulation mirrors the approach to industry regulation that is being canvassed as part of the Quality of Advice Review (see: Scrap SoAs – QoA Review Recommendation).
“Our members as professionals, expect to apply professional judgement to their conduct and hold themselves and their colleagues to the high standards this entails,” Abood notes.
The association says that the FPA Code update comes amid the continued professionalism of the sector, evidenced by the latest figures from the Australian Financial Complaints Authority.
From 1 July 2021 to 30 June 2022, 610 complaints were received related to financial advice, down over 50% from last financial year when 1,238 complaints were received and representing just 0.8% of all complaints received by AFCA.
