AFCA announces new approach to assessing adviser conduct

The Australian Financial Complaints Authority (AFCA) has announced that it will assess adviser conduct against the new Financial Adviser Code of Ethics, which will come into effect on Jan. 01.

AFCA said the new code will be overseen by a single disciplinary body, which is yet to be announced by the government.

“Until the establishment of the single disciplinary body to monitor and enforce the code, AFCA will take a measured and considered approach to interpreting the code’s provisions,” said June Smith, AFCA deputy chief ombudsman, at the Financial Planning Association of Australia’s national congress. “AFCA will only assess adviser conduct against the code where a complaint and the conduct has occurred after Jan. 01, 2020.”

In assessing complaints about firms who provide financial advisory services and products, AFCA also determines whether the conduct of individual financial advisers employed by these firms meets legal, industry, and professional standards.

The ombudsman scheme said it will assess adviser conduct by giving practical meaning to the code, taking into account:

• the intention and objectives of the code as a whole and the professional standards framework from which it is derived;
• the current legislative, regulatory, and professional environment within which the Code operates;
• the Financial Adviser Standards and Ethics Authority’s (FASEA) guidance on the operation of the code’s values and standards; and
• the Australian Securities and Investments Commission’s (ASIC) expectations about steps Australian financial services licensees should take to ensure their advisers comply with the code.

Read more: ASIC reveals approach to, expectations for adviser code of ethics

“In assessing what is a fair resolution of any complaint, AFCA will assess whether the financial firm and its adviser have reasonably met that standard, being mindful that the interpretation of the standard is still being refined via consultation and ongoing rounds of guidance,” Smith said. “AFCA will continue to use its panel of financial advisers and consumer advocates to assist it in assessing whether financial advisers have met the standards of conduct expected of them by the community and under the code.”