I’m sure all licensees will try to ensure that all their representatives comply with the code. The downside risk of not complying is obvious, with the huge remediation bills that have been disclosed by major licensees in recent months. But complying won’t be straightforward because the code is very strict and the recently released guidance has added more confusion than clarity.
Grave concerns have been raised that the FASEA consultation process on both the code and the guidance was inadequate and that the situation is unworkable. We fully support high ethical standards and advisers always acting in the best interests of their clients. But it is essential that higher standards are workable and understandable. FASEA’s code of ethics and guidance fall short on these essential criteria – and trustees are the potential victims.
Most SMSFs have a significant exposure to Australian equities and other listed securities. The last thing needed on January 2 is disruption to the capital markets because stockbrokers and financial advisers are unsure how to comply with the new code while still meeting the needs of their clients to buy and sell securities or to provide advice. There are many small listed companies that rely on raising capital from SMSFs and other retail investors.
There would be greater certainty if the nature of conflicts that need to be avoided was clearly spelt out. Does accepting a brokerage or placement fee constitute a conflict? What about if the adviser owns the same shares? Does a materiality threshold apply?…