Enterprise Governance eJournal

Running Head: FASEA CODE OF ETHICS
FASEA CODE OF ETHICS
Name of the Student
Name of the University
Author’s Note

FASEA CODE OF ETHICS1
Table of Contents
Literature Review.......................................................................................................................1
Article 1: Lesson about Best Interest Duty............................................................................1
Article 2: The Hayne Royal Commission and Financial Sector Misbehaviour-....................2
Article 3: Advice, investment and superannuation in a brave new world.............................4
Article 4: Best Interest Duties of Financial Advisers.............................................................5
Article 5: Conceptualising Financial Advice in Australia:....................................................6
References:.................................................................................................................................9

FASEA CODE OF ETHICS2
Introduction
FASEA code of ethics discusses about various codes of ethics that a financial adviser should
always follow and adhere to while consulting a client. The two most important codes or
standards for this assignment are standard 2 and standard 3. Standard 2 talks about the act of
integrity. According to this standard an adviser should always act in the best interest of the
client. Standard 3 is about ensuring that there is zero conflict of interest while advising the
client. It allows the adviser to consult his peer professionals in case of any conflict or
confusion. The study aims at analysing some past evidences and case studies to synthesize
new knowledge
Evidences
The case studies below covers the two standards of FASEA code of ethics, best interest duty
and conflict of interest.
According to Bruhn and Miller an individual faces a variety of financial and non-
financial risks in his entire lifetime and might look forward to some financial advice and
guidance. Regulatory frameworks and proposals have defined some centred codes that
defines a good or poor quality advice (Bruhn & Miller, 2014). The code defines that the
advice should be in the best interest of the client and the adviser should follow ethical steps.
This article aimed at highlighting features that were considered as examples of poor quality
advice and needs to be eliminated (Bruhn & Miller, 2014). The study uses primary research
such as interviews and surveys with the financial advisers and investors in order to offer
bounds on what represents the quality of an advice and what factors are to be considered at
the time of advising or suggestions to the client.
The study starts with describing various financial provisions in Australia such as a
system of pillars consisting of 3 pillars one, age pension followed by the second pillar

FASEA CODE OF ETHICS3
defining retirement savings and the third pillar determining the private savings (Bruhn &
Miller, 2014). The provision discusses about the complexity faces and the choices that are
made both by the advisers and the investors. According to ASIC, financial literacy can be
defined as the act of making informed judgements in order to take effective management
decisions. The paper then discusses about the two types of advice such as professional advice
and non-professional advice and their roles. It focuses on the consequences that will arise
from the advice, determining the long term implications and outcomes of the decision and
evaluating the risk are the two factors that defines the quality of the advice to be good or bad
(Bruhn & Miller, 2014). In defining the best interest duty the adviser should focus on three
major factors one, understanding the relevant personal circumstances of the client, Second,
focus on considering if the advice is reasonable in all the circumstances of the client and third
factor is to ensure that the advice is appropriate to the client given all the circumstances,
which means that the adviser should know their client better in order to produce a quality
advice.
The study concludes that in order to advise in the best interest of the client, the
necessity for a quality finance is required although the value of finance is tough to asses and
generates significant challenges. The study analyses the case of Storm’s collapse and
suggests some major lessons to be overviewed depending on certain specific conditions. The
first lesson is to consider the risk level tolerance of the client. Next, it focuses on seeking
clarity with the client regarding any underlying assumptions made by the adviser (Bruhn &
Miller, 2014). The adviser should take suggestions from professional peers if certain
strategies are not obvious to both the adviser as well as the client.
The Hayne Royal Commission and Financial Sector Misbehaviour- Lasting Change or
Temporary Fix?