Advisers could face the dilemma of operating under numerous codes of conduct, according to Association of Financial Advisers (AFA) President Brad Fox.

“An adviser would adhere to the AFA’s code as a member of the association, but their dealer group could also have a code, and if they belonged to a third organisation they would need to comply with that code,” he told insuranceNEWS.com.au.

“They would not know which code to obey and the client would be confused about which one their adviser was adhering to as well.”

The Australian Securities and Investments Commission (ASIC) will be approving codes of conduct for advisers as part of the option allowing advisers not to opt in.

Mr Fox says codes of conduct are good for consumers, but steps must be taken so consumers are not confused.

He says there is also code of conduct compliance issues for advisers.

“If the adviser was party to three codes, they will face three audits as ASIC Commissioner Peter Kell has said there needs to be active monitoring of how codes are working,” Mr Fox said.

“We don’t know where these codes of conduct rules will lead, but it is important we don’t saddle the advisers with more red tape.”

There are also concerns lawyers will use codes as a means of ensuring advisers are acting in a client’s interests.

Mr Fox says if an adviser is working under multiple codes, there is always the danger of being compliant with one and non-compliant with another, and a lawyer will pounce on this point.

“It will be a battleground for advisers and I suppose we won’t know of any problems until the first claims are settled,” he said.

It is also unclear at this stage how a code of conduct will work with advisers being exempt from the opt-in proposals, Mr Fox says.

“Mr Kell tells us a code will ‘obviate’ the need for opt-in, but what does this mean?” he said.

“We need a clear definition of how this word works with opt-in.”