Both the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) say the ethics guidance produced by the Financial Adviser Standards and Ethics Authority (FASEA) is confusing and out of touch with current laws.

AFA CEO Philip Kewin says the FASEA guidance will hold advisers to standards that go far beyond what’s required in the Corporations Act.

Standard three of the FASEA Code of Ethics says advisers must not advise, refer or act in any other manner where they have a conflict of interest or duty.

A subsequent statement from the authority last week said the making of the code reflects community expectations that financial advice is “centred on serving the best interests of the client free from any conflict”.

But Mr Kewin says this is tantamount to FASEA creating its own laws. He questions why FASEA’s code appears to completely ban conflicts of interest when the Corporations Act only requires conflicts of interest to be managed.

“Any expectation to totally remove conflicts of interest is simply impractical,” he said. “FASEA clearly does not understand the extent of conflicts in financial services, the impact their removal would have, or appreciate how conflicts are managed.”

FPA CEO Dante De Gori says the guidance raises more questions than it answers. “FASEA has completely failed both in their obligation to consult and to provide clear guidance on how its standards will work in practice.”

He says the process is inadequate and greatly disappointing and has produced guidance that is confusing, out of touch and at odds with existing financial planning laws and standards.

The FPA has called on the Federal Government to step in, with concerns the code clashes with both the Government’s Royal Commission Road Map and the grandfathered commissions bill passed recently.

“After two and a half years, the FASEA board of directors has yet to consult with any financial planning professional bodies or their members, and they appear to be more interested in academic theory than making a genuine effort to improve standards,” Mr De Gori said.

The Code of Ethics is scheduled to come into effect on January 1.