AFCA approach to adviser conduct obligations

The Australian Financial Complaints Authority (AFCA) has today announced how it will assess adviser conduct obligations under the new Financial Adviser Code of Ethics.

The new code, which comes into effect from 1 January 2020, will be overseen by a single disciplinary body which is yet to be announced by the Government.

Speaking at the Financial Planning Association of Australia’s National Congress today, AFCA Deputy Chief Ombudsman, Dr June Smith announced the approach that the ombudsman scheme will adopt.

“Until the establishment of the single disciplinary body to monitor and enforce the Code, AFCA will take a measured and considered approach to interpreting the Code’s provisions,” Dr June Smith said.

“AFCA will only assess adviser conduct against the Code where a complaint and the conduct has occurred after 1 January 2020.”

AFCA considers complaints about firms who provide financial advisory services and products to consumers. This includes assessing whether the conduct of individual financial advisers employed by these firms meets legal, industry and professional standards.

AFCA will assess adviser conduct by giving the Code its practical meaning, taking into account:

  • the intention and objectives of the Code as a whole and the professional standards framework from which it is derived
  • the current legislative, regulatory and professional environment within which the Code operates.
  • the Financial Adviser Standards and Ethics Authority’s (FASEA) guidance on the operation of the Code’s values and standards and
  • the Australian Securities and Investments Commission’s expectations about steps Australian financial services licensees should take to ensure their advisers comply with the Code and specifically the guidance that they will take a facilitated compliance approach with respect to Standards 3 and 7 while FASEA continues to refine its guidance over the period up to the establishment of the single disciplinary body.

Dr June Smith said the Code attempts to improve adviser conduct and ensure they place their clients’ interests first and that they act in a way that is consistent with the values and standards expected of a member of a profession.

“Fairness underpins everything we do at AFCA. In assessing what is a fair resolution of any complaint, AFCA will assess whether the financial firm and its adviser have reasonably met that standard, being mindful that the interpretation of the standard is still being refined via consultation and ongoing rounds of guidance,” Dr Smith said.

“AFCA will continue to use its panel of financial advisers and consumer advocates to assist it in assessing whether financial advisers have met the standards of conduct expected of them by the community and under the Code.”

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