The Financial Adviser Standards and Ethics Authority have released a guidance document for its code of ethics for financial advisers, which will come into effect on January 1, 2020.
The code comprises of five values and 12 standards and has been designed to "encourage and embed higher standards of behavior and professionalism in the financial advice industry."
The five values include trustworthiness, competence, honestly, fairness and diligence, which FASEA said are paramount and all provisions much be applied in a way that promotes these values.
The guidance document summarised and defined each value and what is expected of financial advisers with the authority saying: "It establishes ethical duties that go beyond the minimum requirements of existing law. It should be noted that, as a legislative instrument, the code has the force of law."
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"The implementation of industry-wide higher educational, training and ethical requirements will require a universal effort over the coming years. FASEA considers that this effort is worth making - not least in the area of professional ethics. The reward for doing so will be an increase in public trust and confidence in this evolving profession," FASEA said.
The 12 standards are accompanied by case studies demonstrating the appropriate and inappropriate actions of advisers and include acting in compliance with all applicable laws, acting with integrity and avoiding conflicts of interests.
Under the new code advisers will need to get their client's "free, prior and informed consent" before acting on their behalf and is applicable to existing clients with FASEA saying consent must be obtained as soon as practicable after the code commences.
Prior to acting on behalf of a client advisers must clearly and simply explain what services will be provided, the terms on which they will be provided and the records that will be made of the services, and the privacy and confidentiality arrangement applicable to them.
In addition, advisers will be required to keep complete and accurate records of the advice and services provided to clients, and all former clients.
Prior to the release of the guidance, the authority also released figures relating to the September financial advisers examination which is all advisers need to complete prior to the January 2021 cutoff date.
The September exam was held in 15 centers across Australia with a total of 1697 advisers sitting the exam over 79 sessions.