Speaking at the SMSF Association National Conference 2021, the standards authority’s chief executive, Stephen Glenfield, said it was “fair” to suggest the Treasury would look to amend the code, taking into account industry feedback that the current wording of Standard 3 was unworkable.
Mr Glenfield said a change to the wording of the code was “consistent with the way the Corporations Act has been structured around this”.
“It required FASEA to put in place standards, but within the act it says those standards are to be assessed regularly,” he said.
“To me, the standards have had their beginning period, we’re watching them bed down and gathering information on, can they be made better.
“As part of the handover to Treasury when the legislation goes through, they will get a full briefing of what stakeholders are looking to change. The views [will be] summarised in a way that they can put into their legislative process going forward.”
The comments come following the news late last year that the government would discontinue FASEA as a standalone body and roll its standard-setting powers into the Treasury, with other administrative aspects including code monitoring and exam management to be handed to ASIC’s Financial Services and Credit Panel.
The authority had also released new guidelines around the practical application of the Code of Ethics late last year for consultation.
Mr Glenfield said FASEA had received “a range of responses” calling for the wording of the “controversial” Standard 3 to be altered.
“We received submissions to retain the standard as it is, to adapt the wording of the standard to give it better legal application, to revert to the original application of the standard or to change the standard to provide a ‘disclose and manage’ approach to conflicts,” he said.
“There are a range of views expressed that we need to take account of before making decisions. FASEA will liaise with Treasury to ensure they are across the submissions, which will guide the future of the code and the guidelines.”
Unbeleivable why are we required to study this rubbish
Some much discourse around financial services law and regulation is the about the prescriptive nature of drafting and interpretation, but here we have it, a cacophony calling for this re the Code.
It looks to me that those saying that Standard 3 is unworkable are not yet prepared to develop and use a high level of professional judgement. I can’t see anything unworkable in the simple drafting – you must not advise if you have a conflict of interest or duty. What that means is where a conflict exist (and that is likely to be in many advice situations), you must resolve the conflict in favour of the client or, don’t act for them. So long as you go into the advice engagement firstly, being aware of the conflicts that may be present, and then having prioritised the clients interest over yours, you have removed the “conflict”. This does not mean that advisers have no interests in the engagement, it just means that the client’s interest take priority. As said, the ability to effectively exercise professional judgement, which is the hall mark of a profession, is required to do this.
If, as is likely, ASIC bends to the noise and amends the drafting of S3, we are back on that same old hurdy- gurdy that has created that “Gordian knot” of regulation over financial services. The only way out is to stop demanding prescription and start acting like a true professional.