Issue 664, 26 March 2018
In this issue:
- Financial advisers: draft FASEA Code of Ethics and guidance on educational pathways
- Superannuation calculators: inflation requirements deferred until 1 July 2019
Financial advisers: draft FASEA Code of Ethics and guidance on educational pathways
The Financial Adviser Standards and Ethics Authority (FASEA) has released their draft Code of Ethics and proposed guidance on degree equivalence and education pathways for existing advisers.
As noted in ASFA action issue 620, the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 was passed by parliament on 9 February 2017. The Bill received Royal Assent on 22 February, taking effect from 1 July 2017.
The FASEA Board was appointed by the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP on 10 April 2017 and the inaugural CEO, Dr Deen Sanders OAM was appointed in September 2017.
The FASEA work program includes having new education requirements in place by January 2019 and compliance with a Code of Ethics beginning in January 2020.
Announcing the release, FASEA CEO indicated that:
- regardless of when they obtained their degree, existing advisers with a bachelor’s degree in a related field will need to complete a bridging course of three study units to meet these standards
- regardless of when they obtained their qualifications, advisers with a bachelor’s degree and a postgraduate qualification in a related field will only need to complete a one-unit bridging course covering the FASEA Code of Ethics
- FASEA is working with higher education providers to develop an approval process for bridging course offerings
- the Code of Ethics establishes core values to guide ethical behaviour, client care, quality of process and professional commitment amongst advisers.
FASEA is seeking feedback on the practical implications of key parts of the Code by 1 June.
Feedback on the guidance document, which sets out the proposed education and qualifications pathways as well as degree equivalence for existing advisers, is due by 29 June.
If you have any comments that you would like ASFA to consider including in a response to FASEA, please forward them to Ken Whitton by close of business Tuesday 1 May.
Superannuation calculators: inflation requirements deferred until 1 July 2019
ASIC has deferred, to 1 July 2019, rules requiring providers of retirement and superannuation calculators to ensure their generic financial calculators account for inflation.
As noted in ASFA Action issue 614, ASIC issued ASIC Corporations (Generic Calculators) Instrument 2016/207 in April 2016. This instrument updated and continued relief from licensing, conduct and disclosure obligations for providers of generic financial calculators. ASIC also issued guidance highlighting a key change that require any estimate of a future return included in a calculator to be adjusted for inflation using an assumed rate of inflation of 2.5 per cent (see ASFA Action issues 598 and 600). That requirement to use the assumed inflation rate of 2.5 per cent was to apply from 1 April 2017.
In December 2016, ASIC issued ASIC Corporations (Amendment) Instrument 2016/1090, deferring the commencement date for the new requirement to 1 July 2018.
ASIC has now issued ASIC Corporations (Amendment) Instrument 2018/40 to further defer the commencement of the requirement that calculators adjust for inflation using the assumed rate of 2.5 per cent until 1 July 2019.
Until 1 July 2019, a calculator must display to the user—in the ordinary course of its use, or have printed on it—a clear and prominent statement specifying whether the estimate takes into account an assumed change in the cost of living between the time of the preparation of the estimate and the future time.
ASIC has indicated it postponed the commencement of this requirement for superannuation and retirement calculators because there are superannuation reforms that may impact on how superannuation calculators should present and calculate estimates in the future. These reforms have been deferred until 1 July 2019. During this period, ASIC will further review the suitability of the prescribed discount rate for calculators that produce retirement estimates, taking into account the interests and further views of consumers, superannuation and retirement calculator providers, and actuaries. ASIC will monitor the impact of these reforms to assess the ongoing appropriateness of the requirement to account for inflation.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
