FIN2106 Lecture Notes - Lecture 2: Deposit Account, Debenture, Best Interests
Module 2 – Chapter 2
- Professional bodies have a number of roles including:
oEnsuring that qualification requirements are at a high level
oEnhancing the image of the profession
oMaintaining acceptable practices though codes of ethics
oConduct and achieving self-regulation
- The Financial Planning Association (FPA) is the peak professional body for financial planning
in Australia.
oIt currently has more than 10,000 members managing the financial affairs of
Australians
oThe FPA also confers the Certified Financial Planning (CFP) designation and is also
the sole provider of the CFP Professional Education program
oIt provides the leadership and professional framework that enable members to
deliver quality financial advice to their clients
- The FPA code of ethics is the top layer of professional regulation. It establishes the ethical
foundation for the other FPA standards of professional conduct. It identifies 8 principles that
are expected to be upheld by members in all there dealing. These include:
oPrinciple One: Client First
oPrinciple Two: Integrity
oPrinciple Three: Objectivity
oPrinciple Four: Fairness
oPrinciple Five: Professionalism
oPrinciple Six: Competence
oPrinciple Seven: Confidentiality
oPrinciple Eight: Diligence
- The FPA Practice Standards are the middle layer of professional regulation. They describe
expectations of practice for FPA members. The seven practice standards align with the six-
step financial planning process and they cover:
o1. Engagement
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o2. Collection of the client’s information
o3. Analysis and assessment of the client’s financial status
o4. Identification of suitable financial planning strategies and development of
financial planning recommendations
oImplementation of recommendations
oReview of the client’s situation
oProfessional obligations
- The FPA Rules of Professional Conduct are the third layer of professional regulation.
They are more specific and prescribe the actual business activities that a financial planner is
expected to undertake. Each of the Practice Standards is covered by specific Rules of
Professional Conduct which define the expectations applied to financial advisers work.
- The RBA, in conjunction with the Australian Securities and Investments Commission (ASIC),
The Australian Prudential Regulatory Authority (APRA) and is involved in the operation,
monitoring and regulation of the financial system. The RBA focuses on:
oMonetary policies
oInterest Rates
- The ASIC administers and enforces the laws that govern the way financials services
institutions deal with individual users of the system. It tries to maintain consumer
confidence in the Australian financial system by minimizing fraud and unfair practices.
- The APRA is the prudential regulator for the financial institutions and superannuation funds.
It sets standards for the prudent management of the financial institutions and
superannuation finds to ensure that they remain financially sound.
- The Financial Services Reform Act 2001 (FSRA) repealed chapters 7 and 8 of the CA and
inserted a new chapter 7. The aim is to establish an integrated regulatory framework for all
financial products to enhance efficiency and competitiveness and to encourage innovation
by:
oBringing various financial services and products under one licensing regime
oIntroducing a new disclosure regime for most financial products
oEstablishing a standard of conduct for financial service providers
- Regulatory Guides are published by the ASIC on its website to make the FSRA provisions
clearer to the public. Regulatory Guides organize the Corporations Act (CA) provisions into
topical groupings (E.g. RG146 is about training of advisers). RGs provide guidance by;
oExplaining when and how ASIC will exercise specific powers under legislation
(primarily the CA)
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Document Summary
Professional bodies have a number of roles including: ensuring that qualification requirements are at a high level, enhancing the image of the profession, maintaining acceptable practices though codes of ethics, conduct and achieving self-regulation. The financial planning association (fpa) is the peak professional body for financial planning in australia: it currently has more than 10,000 members managing the financial affairs of. The fpa code of ethics is the top layer of professional regulation. It establishes the ethical foundation for the other fpa standards of professional conduct. It identifies 8 principles that are expected to be upheld by members in all there dealing. These include: principle one: client first, principle two: integrity, principle three: objectivity, principle four: fairness, principle five: professionalism, principle six: competence, principle seven: confidentiality, principle eight: diligence. The fpa practice standards are the middle layer of professional regulation. They describe expectations of practice for fpa members.
