Financial Planning Association (FPA) members are preparing to comply with new principles to manage conflict of interest, and the association is ready to lend a hand where needed to make the transition as smooth as possible.

The first of the principles will come into effect from next month. Principles two, three and four will be adopted over the next two years. The guidance was developed to assist members with the practical implications of the principles.

CEO Jo-Anne Bloch says the guidance clarifies many implementation issues raised by members when the principles were introduced early in March.

“The principles are focused on the obligations of individual financial planners to their clients,” she said. “At the same time, licensees will need to implement any necessary changes to their policies and systems.”

It is acknowledged that changes to business structures will take some time, but the FPA will continue to help members meet the obligations set out.

“In providing consumers with the facts they need to make informed decisions, clarity of fee disclosure is the key to managing conflict of interest and enabling people to assess the value of advice,” Ms Bloch said.

“The FPA expects members to disclose any restrictions on the products that a financial planner may recommend and to examine the need to have a mechanism in place to enable the consideration of products outside of an approved product list if there is nothing on the list appropriate to the client’s needs.”

Members will also be required to have separate corporate governance arrangements for principal members and all related financial service providers.

“It is fundamental that there are mechanisms and arrangements to enable conflict of interest to be effectively managed,” Ms Bloch said. “How this is done will depend on a member’s size and business model.”

The FPA is also launching a new survey this week that will ask its 12,000 members how it should be communicating with them.