“We have been advised that the latest guide does not replace the previous documents, but supplements them. Therefore, we now have three documents and 90 pages of guidance on the Code of Ethics,” the association said. 

“This is overwhelming for financial advisers, particularly at this point, as there are so many other factors for financial advisers to contend with.”

The AFA submission underlined the association’s continued opposition to Standard 3 in its current form, urging the authority to revert to the wording originally released in the draft Code of Ethics legislative instrument in 2018 — that “you must not advise, refer or act in any other manner if you would derive inappropriate personal advantage from doing so”.

“When the code was released in February 2019, with Standard 3 placing a ban on all conflicts of interest or duty, the AFA argued that the revised wording made the Standard unworkable,” the AFA said. 

“Subsequent guidance from FASEA has not been successful in shifting our concerns on Standard 3 and we remain convinced that, in its current form, Standard 3 is not practical. 

“It was extremely disappointing that FASEA did not at any stage consult on the current wording of Standard 3, and had there been consultation, it would have avoided the problems that have since emerged.”

In its submission to FASEA around the guidance, the FPA also pointed to the fact that “Standard 3 is crafted as an absolute prohibition to act if there is a conflict of interest” as likely to cause ongoing problems in a practical sense.

“As has been repeatedly pointed out, conflicts are common in all professions and it is similarly common for other professions to evaluate the materiality of a conflict and manage it appropriately,” the FPA said.

The FPA said inclusion of a “reasonable person test” in the new guide would go some way to allowing advisers to assess whether a conflict was manageable or not, but said a black and white interpretation of the code’s wording by regulators could still put advisers at risk.

“The FPA supports the inclusion of [the] test as it will provide financial planners with enough flexibility to manage immaterial conflicts of interest without having to terminate a client relationship,” the association said.

“However, the FPA remains concerned that the wording of Standard 3 remains unchanged and that this guidance may or may not be considered or followed in decisions by a disciplinary body or an EDR scheme. 

“The FPA strongly recommends that the text of Standard 3 be amended to reflect the reasonable person test and the flexibility that it allows in looking at the materiality of a conflict of interest.”