In January this year, a new regime came into play to raise the education, training and ethical standards of planners and ensure clients’ interests are protected. The standards are governed by the Financial Adviser Standards and Ethics Authority (FASEA).
While the industry has focussed on the educational standards, it is the ethical standards, and the regimes to enforce them, that has the potential to revolutionise fnancial advice. These will impact planners, as well as licensees and funds.
Meeting the education requirements will pose significant challenges, but it is unlikely that more education will impact the nature and quality of advice to the same extent as the new ethical standards.
“It is the ethical standards, and the regimes to enforce them, that has the potential to revolutionise financial advice”
The ethical standards specifically target individual planners, holding them to a best interest duty free of carve outs and safe harbours. They’re designed to ensure planners advocate for their clients and not for product manufacturers. The reforms provide a platform to address the concerns raised through the Royal Commission and should be broadly welcomed by superannuation trustees. But, while their impact will be most keenly felt by those who continue to see advice as a means of distribution, they will also have implications for those who offer advice as a service.
Moreover, the reforms bring another layer of regulation in an already complex regulatory environment, with significant overlap in responsibilities between ASIC, licensees and FASEA.