The CEO of the Australian Institute of Superannuation Trustees, Eva Scheerlink, has identified a potential flaw in the construction of the FASEA Code of Ethics.
In a letter to FASEA CEO Stephen Glenfield, Scheerlink said there was "insufficient clarity on how aspects of the Code will apply to the provision of scaled (particularly intra-fund) advice."
She then noted that, as per ASIC's RG 244, all advice is scaled to a certain extent. However, the current iteration of the Code appears to suggest that an adviser must always keep a client’s broader, long-term circumstances in mind.
“If a much broader conversation is expected with the member,” Scheerlink continued, “then this would significantly increase the cost to provide advice. This may act as a powerful disincentive to a member to seeking advice.”
“It also does not recognise that comprehensive advice is not needed by all members,” she said. “The need to be able to offer cost-effective scaled advice is fundamental, particularly given research that has shown that Australians express a preference for piece-by-piece advice rather than holistic or comprehensive advice.”
Furthermore, Scheerlink said that there is currently only a single reference to general advice in the Code and Guidance, and this just pertains to issues arising from lack of informed consent.
This lack of clarity was troubling because, as she noted, “unconflicted general advice is an efficient way for superannuation funds to deliver simple advice to a high volume of members facing similar issues.” As examples, she cited retirement planning seminars, online calculators, call centres and newsletters.
Scheerlink’s letter follows the AFA’s Phil Anderson making similar observations in a letter to members. In his letter, he said the Code impedes the ability to provide cost-effective scaled advice by “mandating the requirement for a much more comprehensive understanding of the client’s full current personal circumstances, broader family circumstances and likely future circumstances.”
“The outcome of this,” he added, “will be a reduction in both access to financial advice and the affordability of financial advice.”
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