The financial planning industry routinely makes sense for its clients out of complex, convoluted and arcane taxation, social security and superannuation legislation. Adopting a new, industry-wide code of ethics for itself, therefore, should not be an unsurmountable challenge. Whatever struggles the industry is going through to adopt the new code should be worth it, given CoreData research shows that the impact on public trust in financial advice will be strongly positive.

FASEA’s Code of Ethics is designed to underpin and raise standards of professional and ethical behaviour. It does not replace or override the law. FASEA’s Financial Planners and Advisers Code of Ethics 2019 Guidance document explicitly states that the law takes precedence over the code if complying with the code would cause an adviser to break the law.

In all other scenarios and situations, the code is designed to allow a financial planner to exercise individual judgement on how best to deal with a client or a client’s situation, while also operating within the requirements of the law.

In essence, the code of ethics is asking financial planners to start to think like professionals. That may be the crux of the issue – in a world of tick-a-box compliance, it is new territory for some advisers and for some licensees, and it could help to explain the bamboozlement in certain quarters.

All professionals rely on experience, expertise and intellect to guide them through potentially tricky ethical situations with clients. They have worked out over many years how to do this, what’s acceptable and what’s not, often by consulting and collaborating with peers and colleagues. That’s the journey that the whole financial planning community is now embarking upon. It is part of the shift in thinking and behaving that financial planners signed up for when they decided they wanted to be treated and thought of as professionals.

“As with every profession, there is allowance for differences of professional opinion on how the ethical rules of the profession should apply in a particular case,” FASEA’s guidance says.

“Doing what is right will depend on the particular circumstances and requires you to exercise your professional judgement in the best interests of each of your clients” [emphasis added].

The guidance

Perhaps the code and guidance are proving a little difficult to assimilate because complying with a code of ethics doesn’t necessarily lend itself to simple yes-or-no answers. Nor can it be easily addressed by a prescriptive guide to compliance, the kind that advisers have grown up with and are used to. In many situations, the answer to the “best” course of action under the code will be: “it depends”.

All professionals inevitably encounter situations where a code of ethics appears to be at odds with the law, or where a code imposes behavioural conditions that are new or unexpected or at odds with historical commercial practice. That much is to be expected as professional behaviour and standards permeate the financial planning industry. Other professions cope with it.