Overlooked for some of the more notorious parts of the Code of Ethics, Standard 12 has flown under the radar yet presents one of the strongest opportunities for the professional to self-regulate.
Capital Advisory director and certified financial planner Michael Miller will be hosting sessions across all dates on the United Associations Roadshow, hoping to collate a knowledge base on how the profession understands and approaches Standard 12.
“When we really look at Standard 12 and the way it’s actually written and the guidance that has been given, it’s the key to unlocking the concept that we can increasingly take responsibility for our own standards,” Miller tells Professional Planner.
“A lot of practitioners would like elements of self-regulation – a lot of Standard 12 is a key of what this is. We don’t have a strong history of self-regulation; it’s always been very externally imposed.”
Standard 12 states: “Individually and in cooperation with peers, you must uphold and promote the ethical standards of the profession and hold each other accountable for the protection of the public interest.”
Miller says there is interest in gaining a read on the current impression of Standard 12.
“It would be interesting to see how that compares to what has been said in financial planning already and outside [of the profession],” Miller says.
“When we look at some of the accountability aspects, there’s often not a right or wrong to approach it.”
FASEA’s guidance on the standard underscores a vision for advisers to be in the driver’s seat for professionalism.
“This standard deals with relevant providers’ professional relationships with each other, emphasising that they need to be supportive and aligned to the profession as a whole – a profession that acts ethically and professionally.”
Miller says what has been left out from the discussion of the standards is discussion around how approach peer accountability.
He adds advisers understand the sense they must do something, but don’t know where to start.
“It’s putting in a framework in place for people so it’s not [necessarily] the answer, but they [have an idea] of what they would consider,” Miller says.
Introduced at the start of 2020, there has been vigorous discussion about the application of the code overall, but Standards 3 and 6 have dominated much of the discourse.
Standard 3 outlawed giving advice if there was a conflict of interest, while Standard 6 required advisers to consider the long-term interests and circumstances of their clients.
Last year, Financial Services Minister Stephen Jones said there will be a review of Standard 3 after the Government announces its response to the Quality of Advice Review, a position he reiterated during the roadshow hosted by Professional Planner in March.
While Standard 12 didn’t generate the type of headlines Standard 3 and 6 did, Miller believes it is worthy of examination.
“It’s like the forgotten child in the standards there, along with some of the others,” Miller says.
“These standards are new in financial planning. They were only introduced by FASEA a couple of years ago which is in the scheme of things is not very long. They’re exceptionally new in financial planning and how we choose to apply that.”
Taking it to the street
In the meantime, and regardless of where the future of the code heads in a post-QAR world, Miller says there is an opportunity for the profession to build on the current framework.
“Particularly with the united association now, [it is] speaking for a fairly substantial part of the profession,” Miller says, referring to the merger of the FPA and AFA.
The merger officially commenced earlier this month, but both associations were committed to hosting the joint roadshow regardless.
The roadshow commences from 5 May in Hobart and will reach 10 Australian cities.
“If we can go through these exercises where we can pull apart and toss around the aspects of these standards, we have the opportunity to influence how they’re used and applied,” Miller says. “That applies to every standard, not just Standard 12.”
Miller says there are other professions around the world that can be used to offer guidance.
“The area that Standard 12 covers – around professional accountability – this is not the first rodeo,” Miller says. “There’s been a lot of examination and discussion in these other areas that we can start to draw on.”