The FPA has issued new practice standards for planners in a bid to strengthen professionalism and further distinguish between product and advice.
Chief executive officer Jo-Anne Bloch says the practice standards are the first in a series and will embed high levels of technical competence.
They will also provide clients with a better understanding of the advisory process and the level of service they can expect from their financial planner.
“The business of financial planning has been left to what people interpret as their business model, licensee requirements and individual planner requirements,” Bloch says.
“We now have a base by which we can measure and assess quality and consistency and therefore good outcomes.”
The four standards, which are out for member consultation, are: quality client engagement, quality client information, providing quality recommendations and provision of quality advice.
Significantly, the explanatory note under the quality client engagement standard states: “The financial planner must communicate to their client and the client must acknowledge and consent to: any limitation on the financial planner’s ability to provide objective advice; any limitations on the strategies, approaches or products the financial planner may recommend; and any actual, potential, or perceived conflict of interest.”
Furthermore, the FPA notes that “professional financial planning advice should be distinct from the provision of product recommendations”.
Bloch says: “Part of our focus on differentiating between advice and product is to make it clear that they are two different things – advice is overarching, product is a by-product and we’re trying to establish some clarity around it.”
The standards complement existing professionalism requirements for FPA members, which include the FPA Code of Ethics and Rules of Professional Conduct, and Conflict of Interest Principles. “To a large extent we’ve captured what a number of financial planners are doing already, we’ve just put it together in a format that customers, regulators and others can understand and our members can benchmark against,” Bloch says.
The standards were developed by the FPA’s professional conduct committee and will be introduced in July with a one-year transition period.
Regulation
Jones cedes ground on tax adviser rules after crossbench, Coalition blocks
The government has agreed to fix shortcomings raised by industry bodies over new ethical obligations for tax financial advisers. The changes come after two disallowance motions in the Senate attempted to block the new rules.
Tom RavlicOctober 9, 2024
