‘Duplicated’ ethics standards tipped to spur adviser exodus
One of the major accounting bodies has raised concerns that FASEA’s draft code of ethics is “difficult to interpret and enforce” in its current form and doubles up on the standards already required for accounting designations.
In a submission to the Financial Adviser Standards and Ethics Authority (FASEA), Chartered Accountants Australia and New Zealand said that while it supports the principles-based approach proposed by FASEA, it is “concerned that FASEA’s draft Code of Ethics will be difficult to interpret, monitor and enforce in its current form”.
“We believe that FASEA should continue to consult with stakeholders to develop supporting commentary and guidance on the scope and application of the code to both individual advisers and firms, definitions of key terms, as well as guiding principles and case study examples to assist advisers to consistently interpret and apply the code,” the submission said.
“This will also assist consistent interpretation, monitoring and enforcement of the code by ASIC approved code monitoring bodies.”
CA ANZ also discouraged the introduction of additional ethics standards for members of accounting bodies who are already subject to an existing code of ethics.
“We encourage FASEA to streamline and harmonise the requirements of the new code with existing laws, regulatory obligations and standards,” the submission stated.
“This is fundamental to reducing unnecessary complexity and compliance costs for advisers, particularly for smaller firms and businesses, as well as increasing the availability of affordable financial advice to consumers. Failure to do so increases the risk that many well-qualified and experienced advisers will leave the industry.”
The submission recommended that FASEA develop a draft code of ethics in consultation with industry stakeholders that references existing legislated codes of ethics and professional conduct applicable to relevant providers, such as the Code of Professional Conduct for tax (financial) advisers regulated by the Tax Practitioners Board (TPB) under the Tax Agent Services Act 2009.
The submission said FASEA must ensure the “right balance between compliance obligations and consumer protection”.
“Undue compliance burdens such as additional disclosure obligations and other administrative matters will reduce productivity, competition, independence and the delivery of quality, affordable financial advice to consumers,” it said.
“Unnecessary compliance costs increase the risk that well-qualified and experienced advisers will leave the industry. It is particularly a risk for independent advisers, small and medium-sized practices, those in rural and regional areas, advisers with young families and those who may be close to retirement age. This would work against the objective of the legislation to increase the availability of good quality, professional financial advice to consumers.”
Licensing for Accountants chief executive Kath Bowler has also raised concerns that the extra study will see accountants who were planning to retire in ten years, retire in five instead, particularly where its already been covered.
“This is particularly [the case] where there’s no perceived value in the extra study. It’s expensive and it is covering a code of ethics which all accountants would have done already,” she said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.