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FASEA opens up Standard 3 for consultation

Mike Taylor3 November 2021
Breakthrough written in a dictionary


The Financial Adviser Standards and Ethics Authority (FASEA) has moved to action the review of the much-debated Standard 3 of the Financial Planners & Advisers Code of Ethics.

The authority announced the review and released a consultation paper and has given parties until 1 December to respond.

FASEA said the process was part of its obligation to review instruments regularly.

“FASEA is considering amendment to the wording of Standard 3 to align the wording of the Standard to its intent as explained in the Guide. FASEA would welcome stakeholder input on the amended Standard 3 wording options being considered,” the announcement said.

The consultation paper noted that: “Whilst the approach of releasing a standard supported with implementation guidance is consistent with that applied by other regulators including ASIC and APRA, a number of stakeholders have not supported this approach with ongoing commentary that standard 3 is not workable and that guidance cannot be legally relied upon for interpretation”

FASEA’s consultation paper canvasses the following options:

OPTION 1: Incorporate FASEA’s intent into the Standard

You must only advise, refer or act where you do not have a conflict of interest or duty, being that which could reasonably be expected to induce you to act other than in the client’s best interest.

OPTION 2: This option is aligned with Commissioner Hayne’s findings

The findings were that, where possible, conflicts between duty and interest should be removed and his finding that conflicts of interest and conflicts between duty and interest should be eliminated rather than ‘managed’. It also draws on the established principles of conflicts contained in section 963A of the Corporations Act.

You must not receive any benefit (whether monetary or non-monetary), nor enter into any relationship, that could reasonably be expected to influence the advice you give or the service you provide to your client.

OPTION 3: Retain existing wording

You must not advise, refer or act in any other manner where you have a conflict of interest or duty.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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