Are your advisers FASEA ready?
As the end of this year quickly approaches, we’re reminded that the start date for many of the new professional standards for financial advisers, is not far away.
This package of reform imposes new educational requirements on planners, and introduces a regime for monitoring adherence to a code of ethics.
While the industry has been absorbed with the intricacies of the new educational standards, less attention has been paid to the ethical standards framework, which will have more far-reaching impact, and has the potential to reshape advice ahead of the outcomes of the Royal Commission.
What’s in store?
The new regime will require every adviser to belong to an ASIC approved Code Monitoring Body, charged with pro-actively monitoring advisers as well as reactively addressing allegations of poor conduct.
The Code of Ethics requires, amongst other things, advisers to not only comply with the law, but to comply with the spirit of the law. It also requires advisers to act in their client’s best interests, without the protection of the safe harbour steps found in the Corporations Act. Failure to adhere to the Code will be reported to ASIC.
This new regime reinforces the advisers’ obligation to give primacy to their clients’ interests over the interests of their employer or licencee.
What will it mean?
The introduction of ethical standards accompanied by individual accountability should not challenge advisers who offer advice as a service.
But for those who continue to see advice as distribution, the reforms represent a significant change – change that is needed to address outcomes of the Royal Commission and ensure clients’ interests are protected.
And for all advisers and licensees, the reforms bring another layer of regulation and duplication in an already complex regulatory environment.
Here at IFS, we’ve always put members’ best interests first and we’ve been raising our standards to meet community expectations for some time.
Four years ago we introduced our own Advice Assurance Program to include comprehensive monitoring, coaching and education to ensure advice processes are robust and compliant.
Since the Royal Commission and in preparation for the introduction of tougher standards, we’ve further ramped up adviser education to get all advisers FASEA-ready with:
- An annual exam and compulsory CPD already in place
- An education audit of all advisers to identify additional studies required and eligible exemptions
- Webinars delivered to fund executives with information to explain the changes and the consequences for their advisers of failure to meet responsibilities under the fit and proper test.
Contact Chris Joiner at firstname.lastname@example.org if you’d like to know more about IFS financial planning solutions.