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fillip for 'ethical question'

September 2003

The long-running campaign in the UK to require financial advisers to ask their clients whether they have any social, environmental or ethical concerns when discussing investments has received a fillip from the body regulating the investment industry in Australia, which has proposed that advisers routinely put ‘the ethical question’ to clients.

A ‘practice statement’ issued by the Australian Securities and Investments Commission states financial advisers ‘should seek to ascertain whether environmental, social or ethical considerations are important’ to their clients.

The advice has been put forward by Asic as ‘a matter of good practice’, though is not legally binding. It is thought to be the first of its type to financial advisers anywhere in the world. By March 2004 it will apply to all financial advisers in Australia.

The Ethical Investment Association in Australia has welcomed the statement, which is part of new conduct guidelines intended to raise the standard of financial product advice that investors receive.

SRI proponents in the UK have been campaigning for a similar requirement for several years, and the news from Australia will add impetus to their efforts to encourage independent financial advisers (IFAs) to ask the ethical question.

The ‘Retail Revolution’ initiative launched by the UK Social Investment Forum is calling for a similar provision to improve awareness of SRI among individual investors.

The All Party Parliamentary Group on Socially Responsible Investment helped to bring the issue to the attention of politicians and regulators in early June by supporting an early day motion which said IFAs should be required to ask clients whether they wish their investments to reflect their personal concerns. Uksif plans to lobby more in this area.

Uksif’s initiative, which is backed by the Ethical Investment Association, is calling for official guidelines for IFAs ‘that encourage them to give relevant advice to clients interested in SRI’.

Uksif will seek to increase the number of IFAs asking the ethical question by developing its own guidelines. Mainstream IFAs will help to pilot the guidelines in late 2004.




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