The Financial Planning Association of Australia (FPA) has released draft modifications to its code of professional practice that it says “fix” the contentious issues of scaled advice, opt in and best interests.

On the same day that the Australian Securities and Investments Commission (ASIC) released Consultation Paper 191, Future of Financial Advice: Approval of codes of conduct for exemption from opt-in requirement, the FPA has released its own consultation paper calling for members’ views on a proposed revamp of the association’s code.

At the core of planning

The FPA’s chief professional officer, Deen Sanders, says the modifications are designed to place the code at “the core of what it means to be a professional financial planner”.

He says it has been structured so that any practitioner who fulfils the obligations of the code will also discharge all of his or her legal obligations under the Future of Financial Advice (FoFA) amendments to the Corporations Act.

“We would hope that in meeting the code, you actually are meeting all those requirements,” Sanders says.

The FPA already explicitly addresses the issue of conflicted remuneration through its remuneration policy.

“We think we have fixed best interests, we have fixed scaled advice and we have fixed opt in with this modification,” Sanders says.

“Satisfying our expectations in that area will satisfy or exceed your [requirements in law].”

Consultation timetable
18th October 2012 Consultation release to membership and stakeholders
30th November 2012 Consultation close (6 week consultation window)
December 2012 Code finalisation – respond to consultation feedback
January 2013 Republish (amended) Code of Professional Practice
January to June 2012 Workshops, resources and compliance development phase

In coming days, Professional Planner Online will examine in more detail how the modified FPA code addresses and satisfies planners’ scaled advice, opt in, best interests and conflicted remuneration obligations under the Corporations Act, including FoFA. To download a copy of the FPA’s consultation paper, Modifications to the FPA Code of Professional Practice to incorporate FoFA, click here.

As a general rule, Sanders says that black-letter law is not a good way to govern professional relationships and a properly constructed code does the job far more effectively. Modification to the FPA code makes it clear which of the principles relate to which elements of FoFA.

Redressing a legal deficiency

According to Sanders (right), it is vital to place a code of practice at the core of the profession, to avoid problems that arise when professionals’ behaviour is governed solely by legislation.

“This is not just about Corporations Act; this is in fact about 12 years of incorrect law in relation to financial advice – or law that has misdirected us in the way financial advice works,” Sanders says.