FPA, AMP push professionalism

The Financial Planning Association of Australia (FPA) has backed calls by one of the country’s largest dealer groups that all of its financial planners become members of a professional association.

AMP’s director of financial planning advice and services, Steve Helmich, last week reportedly stated that it will become mandatory for all planners in the AMP Financial Planning and Hillross networks to be members of a professional association.

AMP has not placed a timeframe on gaining membership of an association, and says AMP will allow planners to be members of more than one association.

The chief executive of the FPA, Mark Rantall, has backed Helmich’s call and says it is preferable for financial planners to belong a professional association and sign up to a robust code of professional practice than it is to continue being subject to a set of standards imposed by government and regulators.

Regulator rules

Helmich’s comments have turned attention to what constitutes a professional association, to codes of practice or conduct and to the process of having codes approved by the Australian Securities and Investments Commission (ASIC).

ASIC says the financial services sector is not obliged to develop codes of conduct.

However, a fundamental tenet – among several – of a professional association is the existence of a code of conduct and professional standards that are binding on all members.

In addition, an association may seek to have its code approved by ASIC, which the regulator says is “a signal to consumers that this is a code they can have confidence in”.

“An approved code responds to identified and emerging consumer issues and delivers substantial benefits to consumers,” ASIC says in Regulatory Guide 183: Approval of financial services sector codes of conduct.

ASIC says it will only approve codes if it is satisfied that they are not inconsistent with the Corporations Act.

“While a code must do more than restate the law (and indeed should offer consumers benefits that exist beyond the protection afforded by law), it must not be inconsistent with the Corporations Act or other relevant Commonwealth law for which ASIC is responsible,” it says.

“For example, if compliance with a code provision would make it impossible to comply with the law, we will generally take the view that the code provision is inconsistent with the law.

“The ‘not inconsistent’ test does not prevent a code from containing higher standards than those contained in legislation [or] dealing with an issue that is not covered by legislation.”

Complying with a professional association’s code of practice is a condition of membership, and breaching the code may constitute grounds for expulsion from the professional association.

ASIC notes that breaching a code does not necessarily indicate a breach of the Corporations Act; but it may do so if the action that led to the breach of the code also breached the law.

Confidence for all

In a statement, Rantall said “legislators and regulators seek the certainty of dealing with a set of substantive legal, ethical and consumer-centric requirements, which they will either endorse or impose”.

“So, far better that we don’t wait for an imposed set of standards and move quickly to a self-regulated model where all parties, not least the Australian consumer, has the full confidence of dealing with professionals operating under a robust code of conduct and professional standards,” he said.