Code of Conduct exposure draft released

3 October 2013

The Code Committee for Financial Advisers has today released its exposure draft version of the revised Code of Professional Conduct for Authorised Financial Advisers (AFAs).

Code Chair, David Ireland, said a key change from the consultation version was replacing a proposed KiwiSaver certificate qualification with a provision for AFAs to advise on KiwiSaver first home withdrawals without sitting investment qualifications.

The proposed increase in the number of structured professional development hours spread over two years remains, but the definition of structured professional development offers significantly greater flexibility.

The Committee has also restructured the key Code Standards relating to minimum standards of client care.

“It was very clear from both our consultation, and from the Financial Markets Authority consultation on its draft guidance in this area, that these Code Standards cause confusion,” said Mr Ireland.

“We’ve recast four of them. One is now purely about the information AFAs have to provide to ensure retail clients are making informed decisions about engaging them, one is about how and when to determine suitability, the third is about the explanations an adviser has to give when providing an investment planning service or financial advice on a category 1 product, and finally a principles-based adjustment to record keeping obligations to complement the other changes made. We think this will provide a much clearer formulation for what is required.

“We’ve also introduced an express relief from obligations in relation to suitability, for situations where clients are simply instructing an AFA to carry out a transaction for them – for example in the situation where they might want to purchase a particular share and don’t want a full analysis of whether that share is suitable for them.”

Mr Ireland said the Committee was grateful for the engagement shown by AFAs and interest groups.

“Some excellent points were made and taken on board by the Committee. The exposure draft remains principles-based which was important to submitters, but now clarifies some of the principles that may not have been so clear.”

The Committee is seeking final comments on the exposure draft. Comments can be made to and must be received by Thursday 24 October 2013.

The final version of the Code must be approved by the Financial Markets Authority before it can be sent to the Minister of Commerce for final acceptance and gazetting. It is anticipated the new Code will be published in early- to mid-2014.



David Ireland on 021 343 615 or email

About the Code of Professional Conduct for Authorised Financial Advisers:

The Code establishes minimum standards of competence, knowledge and skills, ethical behaviour and client care, along with minimum requirements for continuing education, and training for AFAs. It is required under the Financial Markets Authority Act 2008.

The Code is developed and maintained by a Code Committee for Financial Advisers, appointed by the Financial Markets Authority. Current Code Committee members are: David Ireland (Chair), Ross Butler, Shane Edmond, David Russell, Professor Dimity Kingsford-Smith, Gary Young and Michael Staal.

Further information about the Code and the work of the Code Committee can be found at the Committee website:

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