The Association of Financial Advisers (AFA) will use the extended time frame for the opt-in component of Future of Financial Advice (FOFA) reforms to “get it right” with its code of conduct.
The AFA has said it is looking for a practical approach to the issues, and will use the extended time frame provided to ensure it properly addresses the complexity of the regulations.
“The first opt-in obligation does not kick in until July 2015, so the industry has the time to get this right,” AFA chief executive Brad Fox said.
The association said it is working with key advice professionals in order to find a practical approach to the code of conduct requirement and is considering a two-part approach.
A two-part code would make all AFA members subject to the code’s first part, based on guiding professional behaviours.
It would also give members the option to belong to part two of the code, which would allow them to obviate the need for opt-in by applying additional service requirements across clients.
“This appears to be a practical way of helping our members choose a code that suits their preferred business model and which is also compliant,” Mr Fox said.
“However, the option of a two-part code will be subject to further discussion with, and consideration by, the Australian Securities and Investment Commission. It’s an alternative worthy of consideration by advisers, licensees, and the regulator.”
Mr Fox said that it is important that codes of conduct are seen as a way to increase professionalism within the financial service industry.
He said that it is important that the industry takes the time to address this to ensure codes of conduct do not just act as a way to bypass opt-in requirements.
“Codes of conduct set expectations for behaviour and are critical in ensuring client outcomes,” Mr Fox said.
“However, the opt-in exemption, which is about getting an exemption from the law, means they are morphing into something else.
“There are significant implications that flow from this approach, and the industry needs to take the time to get it right.”
