Limitations of Financial Adviser Standards and Ethics Authority’s Code of Ethics

Abstract

According to the Corporations Amendment Act 2017 (Australia) and Corporations Act 2001 (Australia), the Financial Adviser Standards and Ethics Authority has issued a final version of Financial Planners and Advisers Code of Ethics (FASEA’s Code of Ethics) that will commence on 1 January 2020. Focused on FASEA’s Code of Ethics, our paper argues that the adoption of this Code of Ethics and accepting the fiduciary responsibility by financial advisers will be challenging as the code lacks integration and preciseness.Research Design/Methodology: This a study based on secondary sources, taken from varied journals, reports and online sources.Findings: FASEA’s Code of Ethics is not aligned with the code of ethics of other professional bodies who are to monitor its implementation. Our paper also raises the question about legislation of standards for ethics based on general values. The new code of ethics fails to build the connection between unethical behavior and its consequences. Our paper discusses the components of FASEA’s Code of Ethics and the new increased educational requirements that are proposed by the FASEA’s Code of Ethics. Also, the problem of ‘informed consent’ conflict is not resolved. Therefore, its acceptance by the professional financial bodies is unlikely to help enhance the clients’ perception about the competence and integrity of the financial adviser, which was one of the main goals of the FASEA’s Code of Ethics.Research Limitations: Financial Planners and Advisers Code of Ethics need an ongoing observation, the data we have is constantly being adjusted by official authorities.Originality/Value: Our suggestions include evaluation of value added by additional layer of the FASEA’s Code of Ethics and indicate clearly the obligations of Code Monitoring Bodies so as to clarify the interaction between the FASEA’s Code of Ethics and other professional codes of ethics. FASEA should also balance the relationships among education requirements, practice experience and ethical reasoning levels so that the adoption of the code is more acceptable to the advisers.