The first week in a series of consultations between FASEA and industry representatives has taken place, with the authority’s CEO, Stephen Glenfield, defending the Code of Ethics’ treatment of conflicts and paid referral arrangements as well as staring down a hostile crowd of licensee heads.

Flanked by an assortment of FASEA board members, Glenfield faced educational institutions in Sydney on Monday, industry associations on Tuesday and Wednesday, and licensees on Thursday.

FASEA will have a full-day board meeting on Monday and conduct several more consultation meetings next week, including one with consumer representatives and one with industry regulators including AFCA, ASIC and Treasury.

Sources say the licensee consultation meeting on Thursday was the most antagonistic of the week, with the discourse notable for several heated statements from licensee representatives. Key issues included the short implementation time frame and the lack of distinction as to how the Code of Ethics applies to wholesale and retail clients.

At the industry association meeting Glenfield was joined by FASEA standards director Amelia Constantinidis and board member Deborah Kent. The CEO is understood to have faced a slew of queries about the application of the Code of Ethics’ Standard 3, which prohibits advisers from advising, referring or acting if a conflict exists.

Glenfield’s defence of Standard 3 – beyond the stated guidance to look at the code “in its totality” – was that it only prohibits the adviser acting in the face of actual conflicts, as opposed to potential or perceived conflicts. It’s the same defence he used when Queensland Senator Amanda Stoker fronted Glenfield on the topic in front of a Senate Economics Committee hearing in late October.

Asked whether the code itself was likely to be amended to reflect this language, the CEO reportedly demurred. The guidance itself is a living, breathing document, he countered, and subject to change. The Code is not.

FASEA released an updated Code of Ethics Guidance document on October 24, which was expected to address concerns from advisers around the treatment of conflicts. The release furthered confusion by telling advisers they would not be in conflict if they were “duly remunerated”, nor would they breach Standard 3 if they shared in profits “incidental to the adviser’s dominant purpose in providing advice”.

It is understood that during the consultation the financial adviser standards and ethics authority indicated it is unlikely to ban life commissions, asset-based fees, brokerage fees or vertical integration, but will look to outlaw paid referral agreements.

Deborah Kent’s view, which Glenfield also expressed during an interview with Professional Planner, is said to be that the industry should be professionalised in line with accounting and law, and that referrals should be based on merit alone.

It would be problematic if any such referral ban encompassed mortgage brokers and lenders as such arrangements are governed under the National Consumer Credit Protection Act 2009. However, Standard 3’s clash with the Corporations Act is evidence that the authority won’t be bound by existing legislation.

FASEA is requesting feedback on their guidance document by 22 November 2019. The authority is expected to release an updated version of the Code of Ethics guidance in December.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at
2 comments on “FASEA faces heat at Sydney consultations”
  1. Avatar Scott Barlow

    There’s ‘professional’ which is widely accepted as meaning someone with high skill or expertise or ‘qualifications’ and then there’s ‘professional’ being someone who meets higher standards of conduct and ethics. The financial planning industry imagines itself to straddle both. But what truly defines a profession (and its membership – professionals) is that the members have disciplined under a widely recognised (scientific, or systematically-derived) body of learning and derived their expertise and skills from undertaking considerable research, education and training at a high level such that they have achieved not only great skills but community sanction. By this truer measure, the financial planning industry under FASEA and in the wake of the RC, finds itself further from being a ‘profession’ than it has ever been.

    In any case, those who argue for ‘professionalism’ are getting a taste of what comes packaged with it. Professionalism plays right into the hands of the meddling state, first by allowing it to confiscate with menace and second to impose burdensome taxes/costs/expenses and other impositions usually by some flimsy pretext (regulation, consumer or ‘public’ interest) while preserving always…the right to scapegoat the industry as soon as things inevitably go awry.

  2. Avatar Christoph Schnelle

    Is standard 3 contradicting or clashing with the Corporations Act or is it simply that. not everything that is permissible under the Corporations Act is allowed under the Code? A professional is bound by more rules than those in legislation and therefore more limited in what they can do. That is simply the nature of being a professional.

Leave a comment