The Financial Adviser Standards and Ethics Authority (FASEA) standards that came into effect from 1 January 2020 are compulsory for all financial advisers who provide financial services to retail clients. The FASEA Code of Ethics imposes ethical duties that exceed the legal requirements of the law and, as such, aims to embed higher standards of behaviour and professionalism in the financial advice industry.
Without a doubt, these regulations represent a milestone in the financial services industry that will drive adviser behaviour, affect business and client servicing models, enhance compliance and operational processes, and increase the professionalism of the industry. These impacts have already commenced, and the changes will continue over the coming years.
The FASEA Code of Ethics is built on 12 standards that provide the conduct framework for engagement with clients, and the following five value pillars:
- Trustworthiness
- Competence
- Honesty
- Fairness
- Diligence
Much of the discussion to date has centred around the educational and exam requirements and the disruption it has created in the financial services industry. However, it is time to shift the focus to a more productive examination of the practicalities of implementation and what it means for advice processes.
This whitepaper discusses the likely implications of the FASEA standards for the financial services industry, with a focus on the increasing importance of aged care advice. The aim is to provide insights to guide advisers and licensees on the steps to take to be well positioned to meet the FASEA obligations, to protect their business from disruptions and enable advisers to be at the leading edge and positioned for growth. In particular it will discuss the impact on:
- advice behaviour, processes, delivery models and business structures
- delivery of client services
- operational processes.
The FASEA standards reinforce the need for advisers to consider the aged care implications for clients and implement an aged care advice solution to comply with the Code of Ethics.
I afraid FASEA will be hitting the wall of pain shortly when Advisers provide every client with a scaled advice statement at the start of the first interview. Notwithstanding the left wing socialist lawyers in FASEA who want their code to over-ride the Corporations Act and replace ASIC as the regulator, the legal position will be clear for the client.
"If you wish me to provide advice these are the boundaries. If you want me to consider Aged Care then the price will be $xxxx more. What is your decision?" If you do not want me to and sign off on that I will not.
Next FASEA will be asking us to advise on the social distancing policies of clients. I think that the ASIC folk are going to be very shortly out of a job with the advice industry.