The Association of Financial Advisers (AFA) has called for more clarification and key changes on the Financial Adviser Standards and Ethics Authority code of the ethics.
FASEA released its first guidance on the code, which will come into effect next year, late last week.
The guidance document is 40 pages long and contains 32 examples.
In a letter to members, the AFA said that Standard 3 which reads "You must not advise, refer or act in any other manner where you have a conflict of interest or duty" is impractical.
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"In two subsequent consultations with FASEA we were assured that we should not interpret this standard too literally and the Guidance would be issued to allay our concerns," the AFA said.
However, FASEA said in a media release accompanying the guidance: "The making of the Code and changes to education and training standards, reflect community expectations that the provision of professional advice be centred on serving the best interests of the client free from any conflict."
The AFA indicated it was disappointed by this release.
"This is tantamount to FASEA creating its own laws, way above the current law," the AFA told members.
"We simply do not understand how it is possible, when the Corporations Act only requires conflicts to be managed, and the law specifically permits life insurance commissions and other conflicted arrangements, that FASEA could issue a Code of Ethics, that is binding on all financial advisers that appears to completely ban conflicts of interest."
The association went on to say that any expectation that conflicts can be entirely removed in advice is "simply impractical" and FASEA does not seem to understand the extent of conflicts in financial services.
The AFA said it is consulting with FASEA to seek a blanket statement that the receipt of commissions for the provision of advice on life insurance is acceptable.
The association is also seeking clarity with respect to referral arrangements and clarity regarding the need to obtain consent from existing clients as soon as practicable in order to continue to receiving remuneration.