FASEA Code of Ethics
...a new level of professionalism
The FASEA Code of Ethics is a cornerstone of the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 which established the Financial Adviser Standards and Ethics Authority (FASEA) with the responsibility to set the education, training and ethical standards of licensed financial advisers in Australia.
FASEA issue standards and the Code of Ethics, with which all financial advisers must comply, outlining their ethical obligations to their clients and educational standards or pathways that new and existing advisers must meet in order to comply with the requirements in the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017. These Standards include the requirement to pass the national FASEA Financial Adviser Exam.
All Financial Planners and Advisers are required to comply with the FASEA Code of Ethics from 1st January 2020.
What is the FASEA Code of Ethics?
The Code issued by FASEA is a set of principles and core values that lays the foundations for a true profession to emerge. It is a principles based model providing a powerful framework to shape and reinforce ethical conduct and encourage a deeper engagement by the individual with their duties to their client as well as wider society.
The FASEA Code of Ethics and the Standards within it are a matter of legal obligation and provide a foundation for conduct for all financial advisers, whatever their employment circumstance.
Who is responsible for ENFORCING the FASEA Code of Ethics?
Licensees (AFSL holders) are responsible to ensure their Financial Planners and Advisers comply with the code of ethics from 1 January 2020. This is effectively a temporary measure until the Federal Government has had time to constitute the Single Disciplinary Body (SBD) which it has indicated will be fully functioning from 1st July 2021.
The Single Disciplinary Body (SBD) will have have primary responsibility for government oversight of the conduct of financial planners, setting mandatory professional standards, investigating potential breaches of mandatory standards and law (including the FASEA Code of Ethics), and applying discipline.
Until then, Licensees are responsible for monitoring and enforcing the Code of Ethics.
The 5 “reasonable steps” of Code management for Licensees
Licensees will be required to take reasonable steps to ensure that their Financial Planners and Advisers comply with the code. ASIC may take enforcement action where it receives breach reports.
The reasonable steps that ASIC expects AFS licensees to take to ensure that their financial advisers comply with the code include the following systems and processes:
- making sure that their advisers are aware that they need to comply with the code from 1 January 2020 onwards;
- providing training and/or guidance to their advisers on the types of conduct that is consistent/inconsistent with the code;
- facilitating individual advisers’ ability to raise concerns with the AFS licensee about how the licensee’s systems and controls may be hindering their ability to comply with the code, and acting on those concerns where appropriate;
- considering whether advisers are complying with the code as part of their regular, ongoing monitoring of adviser conduct; and
- when it is in place, considering the decisions of the new disciplinary body and making any necessary changes to their systems and processes.
In determining what constitutes reasonable steps ASIC will take into account the context in which Licensees are operating. This includes the current dynamic regulatory environment, the timing of guidance provided by FASEA about the meaning of the code, and the evolving industry understanding about the meaning and implications of the code.
Standard 3: You must not advise, refer or act in any other manner where where you have a conflict of interest or duty
In this video from myIntegrity’s recent FASEA Exam Prep Masterclass (Webinar) Program, I explain how Standard 3 of the FASEA Code of Ethics operates. Importantly, I explain how Standard 3 operates in conjunction with Standard 7 of the Code, as well as how Financial Advisers can still take in to account the requirements of Standard 6 even when providing ‘scaled advice‘.
If you would like to discuss this video in more detail or would like more information about our range of FASEA Exam Programs, please feel free to call me on 0408 056 679 or email firstname.lastname@example.org.
COMPLY with the FASEA Code of Ethics
Financial Advisers & Financial Planners
must adhere to the FASEA Code of Ethics
as implemented by the
Financial Adviser Standards and Ethics Authority (FASEA)
Click below for Code of Ethics GUIDANCE PACK