The Financial Adviser Standards and Ethics Authority is under pressure to clarify its stance on all forms of managed accounts.
FASEA chief executive Stephen Glenfield confirmed he has met with the Institute of Managed Account Professionals and is considering whether managed accounts require specific guidance from the authority.
"We've met with the IMAP crew," Glenfield told Financial Standard.
"We are considering whether [managed accounts] need guidance going forward. It's certainly on our radar."
Glenfield encouraged those concerned about what standard 3, which says advisers must not advise, refer or act in any other manner where they have a conflict of interest or duty, means for managed accounts to consider the code as a whole - rather than just one standard.
"I think you'd do it in the same way you've done other forms of charging a fee. You need to sit back and consider that service in the realms of the totality," Glenfield said.
"I think it comes down to, if you look at what's come out of all the enquiries in recent times - has disclosure and conflict management worked?"
He also suggested that some have concerns about conflicts that don't actually exist.
"What we're trying to do is show what is an actual conflict. The standard relates to actual conflicts. I think a lot of what gets discussed is potential conflicts," Glenfield said.
"It's about stepping back from those potentials and looking at actual compliance with the code."
Toby Potter, chair of IMAP, revealed to Financial Standard that IMAP was invited to provide an example to FASEA as a means of seeking clarity on the issue.
IMAP sent an example to FASEA which runs through an advice business with its own AFSL, a broad approved product list and over 1000 clients which began offering multi asset class, multi manager managed accounts five years ago.
In the example, the adviser who recommends managed accounts is also a major shareholder in the advice company and therefore stands to benefit from the margin the advice firm earns on the managed accounts fees.
FASEA has not yet provided its guidance on the IMAP example, but Potter is hopeful it will assess the management of conflicts in what is a fairly typical managed accounts practice as reasonable.
"Our view is that the code is extending the principles of law in a completely inappropriate way. No adviser can take comfort from the chief executive of FASEA saying the code should be considered in totality," Potter said.
"Each arm of the code is a piece of law in itself and you can breach each individual arm even if you were in compliance with every other standard. So we don't have much comfort in FASEA saying the code should be looked at in totality."
Potter said with no code monitoring body in place but an obligation for each financial adviser to comply with the code, the industry is now in a situation where each adviser and licensee will have to interpret the code and compliance with it.
"I have no confidence that some form of adjudication will feel in the least bound with this idea that the code only needs to be complied with in a general sense," Potter said.
A lawyer in the IMAP regulatory group pointed out to Potter that explanatory guides are only referred to by judges when the law is unclear.
"There's nothing unclear about standard 3. It is crystal clear. So you can't take any comfort from the explanatory guide," Potter said.
"Nobody's criticising the principles the code embeds, it's only the black letter standards as they have been drafted."
While Potter said he is sympathetic to FASEA's aims and the principles of the code and that he held out hope IMAP would receive some clear guidance in light of its example, he had his criticisms for the situation the industry is in as a result of the FASEA changes.
"It's a really peculiar situation when you have a senior bureaucrat saying 'I know what the law says, but we actually didn't mean it' - that's not how government and bureaucracy is supposed to work." Potter said.
"He will carry on getting paid with all the protections of the Public Service Act, whereas every adviser puts his career on the line from January 1."