Date posted: 18/07/2018 3 min read

Improving financial adviser professionalism and ethical behaviour

The new FASEA Code of Ethics must balance consumer protection and compliance costs.

In Brief

  • Tackling financial adviser misconduct requires improving professionalism and ethical behaviour.
  • CA ANZ has made a submission on FASEA’s draft Code of Ethics for licensed financial advisers.
  • The new Code must balance the need to increase consumer protection and reduce compliance costs.

The misconduct revealed to date by the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, has eroded consumer trust and confidence in financial advice, and highlighted the importance of professionalising the industry.

Improving professionalism and consumer outcomes requires a greater commitment from financial advisers to demonstrate ethical behaviour and take individual responsibility for protecting the public interest.

Ahead of its submission on the Financial Adviser Standards and Ethics Authority’s (FASEA) draft Code of Ethics for licensed financial advisers, Chartered Accountants ANZ consulted with members, FASEA, education providers, as well as other professional associations and industry stakeholders.

Chartered Accountants ANZ’s submission recommended that FASEA draw on the lessons learned from the Royal Commission in developing its draft Code of Ethics.

The submission supports the principles-based approach taken by FASEA as this will encourage greater individual responsibility and accountability. In addition, it will help facilitate adoption by advisers, such as Chartered Accountants, who will also continue to operate under their own professional Code of Ethics.

“Chartered Accountants ANZ has long advocated for appropriate industry reform to ensure that more consumers are able to obtain good quality, ethical and professional financial advice,” said Sarah Davidson, Chartered Accountants ANZ’s Australian Government Affairs Leader.

Following feedback received from hundreds of members through an online survey and national roadshow consultation, the submission called on FASEA to streamline and harmonise its Code of Ethics with existing laws, regulatory obligations, professional Codes of Ethics and professional standards.

Members have particularly raised concerns about the amount of additional study proposed by FASEA for the new Code of Ethics, given that the vast majority of members already operate under at least two or more professional Codes of Ethics.

“We believe that FASEA’s new Code of Ethics must balance the need to increase consumer protection, with the need to reduce complexity and compliance costs for advisers,” said Davidson.

The submission also raised concerns that FASEA’s draft Code will be difficult to consistently interpret, monitor and enforce in its current form.

The submission recommended that FASEA continue to consult with stakeholders to develop supporting commentary and guidance on the scope and application of the Code, definitions of key terms, as well as guiding principles and case study examples to help advisers and licensees to consistently interpret and apply the Code. This will also help ASIC-approved Code monitoring bodies to consistently interpret, monitor and enforce the Code.          

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Members are invited to provide feedback on professionalising the financial advice industry and improving consumer outcomes.

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Chartered Accountants ANZ’s submission on FASEA’s draft Code of Ethics

Download here

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