Revised Code of Conduct submitted to FMA

The Code Committee for Financial Advisers has submitted its proposed revised Code of Professional Conduct for Authorised Financial Advisers (AFAs) to the Financial Markets Authority (FMA).

Code Chair, David Ireland said, “It became clear during the consultation process that the Code’s principles-based approach is supported by the adviser industry. The proposed changes therefore align with this approach but clarify certain principles, particularly where uncertainty as to their application was expressed.”

Key changes proposed from the current code include:

  • clarifying that code standard 1 is paramount, to place the interests of the client first and act with integrity
  • a provision enabling AFAs to advise on KiwiSaver first home withdrawals without sitting investment qualifications
  • increasing the number of structured professional development hours AFA’s are required to undertake spread over two years from 20 to 30 hours, whilst broadening the definition of structured professional development so there is greater flexibility for AFAs in determining what will count as ‘structured’
  • a new Code Standard for transparently managing conflicts of interest
  • restructuring the key Code Standards relating to minimum standards of client care

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

The final version of the Code must be approved by FMA before it can be sent to the Minister of Commerce for final acceptance. Following acceptance, FMA will give notice in the Gazette of the date when the new Code comes into force, which is anticipated to be early to mid-2014.

Ends

Contact

David Ireland on 021 343 615 or email chair@financialadvisercode.govt.nz

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:www.financialadvisercode.govt.nz

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 consultation@financialadvisercode.govt.nz 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.

Ends

Contact

David Ireland on 021 343 615 or email chair@financialadvisercode.govt.nz

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: www.financialadvisercode.govt.nz

Code of Conduct consultation begins

9 August 2013

The Code Committee for Financial Advisers has begun consulting on proposed changes to the Code of Professional Conduct for Authorised Financial Advisers.

Code Chair, David Ireland, says with the Code in force since December 2010, it was timely to initiate a review. In particular the Committee was keen to review the effectiveness of the Code in light of its objectives and experiences to date.

“Overall, the Committee is comfortable that the Code provides a sound, principled set of professional standards for authorised financial advisers (AFAs) to adhere to. But there is always room for improvement ,” said Mr Ireland.

Key changes recommended by the Committee include:

  • Amendments to code standard 1 (client first) to reinforce it is the overarching code standard
  • A replacement conflict of interest code standard
  • Changes to support a new qualifications framework (likely to be introduced next year) that will increase minimum standards of competence, knowledge, and skill for AFAs
  • Introducing more flexibility in continuing professional training and clarifying requirements for structured training

Mr Ireland said the Committee is particularly interested in feedback on how well the current suitability and basis for advice code standards are working.

“There has been a lot of industry feedback about how these may be limiting access to professional financial advice. This is not a desired outcome, so it’s very important we get some detailed feedback on these points,” said Mr Ireland.

Industry participants and consumer representatives are encouraged to attend public meetings about the Code being held in Auckland, Wellington and Christchurch. Submissions on the proposed changes close on 6 September 2013.

Ends

Contact 
David Ireland on 021 343 615 or email chair@financialadvisercode.govt.nz

The Code Committee for Financial Advisers is appointed by the Financial Markets Authority under the Financial Advisers Act 2008. It developed and now maintains a Code of Professional Conduct for Authorised Financial Advisers (AFAs). 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.

The current members are: David Ireland (Chair), Ross Butler, Shane Edmond, David Russell, Professor Dimity Kingsford-Smith, Gary Young and Michael Staal.

Consultation information can be found at the Committee website: www.financialadvisercode.govt.nz

Chair for Financial Adviser Code Committee re-elected

The Code Committee for Authorised Financial Advisers (AFAs) has re-elected David Ireland as Chair for the next 12 months.

A partner at Kensington Swan and a member of the Code Committee since it was established in 2009, Mr Ireland will lead the committee as it keeps under review current regulatory and legislative developments and assesses potential impacts on the Code of Professional Conduct for AFAs.

“The Committee is about to consult on proposed enhancements in its first formal review of the Code since it came into force on 1 December 2010,” said FMA CEO Sean Hughes.

“David’s in-depth knowledge of the Code will be invaluable in leading the Committee through this work.”

Committee member Michael Staal was also recently reappointed to the Code Committee for a further one year.

Ends

Tony Reid on 021 739 052 or tony.reid@fma.govt.nz

About the Committee:

The Code Committee for Financial Advisers maintains a Code of Professional Conduct for Authorised Financial Advisers (AFAs). 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.

The current members are: David Ireland (Chair), Ross Butler, Shane Edmond, David Russell, Professor Dimity Kingsford-Smith, Gary Young and Michael Staal.

Information about the work of the Committee can be found at: www.financialadvisercode.govt.nz

New Chair for Financial Adviser Code Committee

9 August 2012

The Code Committee for Authorised Financial Advisers (AFAs) has elected David Ireland as Chair for the next 12 months.

A partner at Kensington Swan and a member of the Code Committee since it was established in 2009, Mr Ireland will lead the committee as it keeps under review current regulatory and legislative developments and assesses potential impacts on the Code of Professional Conduct for AFAs.

“I congratulate David Ireland on his appointment and look forward to continuing an effective partnership with the Committee,” said FMA CEO Sean Hughes.

Mr Hughes also thanked outgoing Chair, Ross Butler, for his pragmatic and professional approach in leading the Committee for three years.

“Ross’s commitment and energy played a large part in ensuring there would be industry support and buy-in for the Code of Professional Conduct for AFAs,” Mr Hughes said.

“While other commitments now prevent him from continuing as Chair, we’re pleased he has been able to stay on as a member of the Committee to help support their work.”

Committee member Pip Dunphy has also stood down from the Code Committee.

“Pip’s focus has been to raise the bar of professionalism and competence in the industry. She brought a very clear perspective to the Code Committee’s governance table,” Sean Hughes said.

ENDS

Tony Reid on 021 739 052 or tony.reid@fma.govt.nz

About the Committee:

The Code Committee for Financial Advisers maintains a Code of Professional Conduct for Authorised Financial Advisers (AFAs). 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.

Other current members are Shane Edmond, David Russell, Professor Dimity Kingsford-Smith, Gary Young and Michael Staal.

Further information about the work of the Committee can be found at: www.financialadvisercode.govt.nz

Revised Code of Professional Conduct for Authorised Financial Advisers Submitted

20 August 2010

The Code Committee has today submitted a revised draft Code to the Commissioner for Financial Advisers for approval.

The revised Code is available here.

The amendments have been made in response to the Commissioner’s Direction dated 17 August 2010 to ensure that the Code is consistent with the Financial Advisers Act 2008. The main amendments made by the Committee are:

  • The description of the financial adviser services requiring authorisation as set out in the Background to the Code has been updated to accord with changes to the Act that came into force on 1 July 2010.
  • An explanatory note has been added to Code Standard 5 clarifying both its limited application and the fact that an AFA may not provide financial advice to a retail client in relation to the acquisition of a financial product that is not able to be lawfully offered to the client.
  • A note has been added to Code Standard 8 clarifying that where a client has sought personalised advice from an Authorised Financial Adviser, but has opted out of receiving a suitability assessment such that the Adviser ends up providing a class service, the Adviser must comply with Code Standard 10.

Response to Major Submission Points, Second Draft of the Code

Next week, the Committee will publish a paper summarising major issues considered by the Committee in response to submissions made on the second draft of the Code released on 2 July 2010.

The issues summarised will include those where the Committee felt that an explanation may assist those considering the version of the draft Code submitted to the Commissioner, and may help to give context to the changes made (or not made) since the second draft.

The paper will also reflect the Committee’s thinking on the three matters raised by the Commissioner this week.

All issues raised with the Committee have been taken into account in finalising the Code.

Public submissions received, along with the issues paper, will be available at the Committee’s website www.financialadvisercode.govt.nz

Getting Ready

On behalf of the Committee, I encourage advisers to take advantage of the many resources provided by the sector, and by training providers, to ready themselves for this new regime.

Assuming that the Code is approved by the Commissioner, and subsequently by the Minister, it is likely that the first advisers will be authorised from 1 December 2010.

The latest information about the competence requirements for authorisation can be found at http://www.afacompetence.org.nz . At this site, advisers can also book examination and workplace assessment, upload evidence, and check assessment results.

Thank you

I wish to thank the members of the Code Committee for the professional contributions they have made to the development of this document.

I appreciate that they each have other demanding roles, and I acknowledge the personal and corporate sacrifices and investment they have made.

I also wish to acknowledge the very useful contributions made by consumers, advisers, their companies and professional bodies, and by other stakeholders.

The Committee appreciates their involvement in the development of the draft Code, and their active participation throughout this comprehensive consultation process.

Ross Butler 
Chairman 
Code Committee

Ends

For further comment, please contact Ross Butler on 021 359 899

Revised Code of Professional Conduct for Authorised Financial Advisers Submitted

20 August 2010

The Code Committee has today submitted a revised draft Code to the Commissioner for Financial Advisers for approval.

The revised Code is available here (PDF 279KB)

The amendments have been made in response to the Commissioner’s Direction dated 17 August 2010 to ensure that the Code is consistent with the Financial Advisers Act 2008. The main amendments made by the Committee are:

  • The description of the financial adviser services requiring authorisation as set out in the Background to the Code has been updated to accord with changes to the Act that came into force on 1 July 2010.
  • An explanatory note has been added to Code Standard 5 clarifying both its limited application and the fact that an AFA may not provide financial advice to a retail client in relation to the acquisition of a financial product that is not able to be lawfully offered to the client.
  • A note has been added to Code Standard 8 clarifying that where a client has sought personalised advice from an Authorised Financial Adviser, but has opted out of receiving a suitability assessment such that the Adviser ends up providing a class service, the Adviser must comply with Code Standard 10.

Response to Major Submission Points, Second Draft of the Code

Next week, the Committee will publish a paper summarising major issues considered by the Committee in response to submissions made on the second draft of the Code released on 2 July 2010.

The issues summarised will include those where the Committee felt that an explanation may assist those considering the version of the draft Code submitted to the Commissioner, and may help to give context to the changes made (or not made) since the second draft.

The paper will also reflect the Committee’s thinking on the three matters raised by the Commissioner this week.

All issues raised with the Committee have been taken into account in finalising the Code.

Public submissions received, along with the issues paper, will be available at the Committee’s website www.financialadvisercode.govt.nz

Getting Ready

On behalf of the Committee, I encourage advisers to take advantage of the many resources provided by the sector, and by training providers, to ready themselves for this new regime.

Assuming that the Code is approved by the Commissioner, and subsequently by the Minister, it is likely that the first advisers will be authorised from 1 December 2010.

The latest information about the competence requirements for authorisation can be found at http://www.afacompetence.org.nz . At this site, advisers can also book examination and workplace assessment, upload evidence, and check assessment results.

Thank you

I wish to thank the members of the Code Committee for the professional contributions they have made to the development of this document.

I appreciate that they each have other demanding roles, and I acknowledge the personal and corporate sacrifices and investment they have made.

I also wish to acknowledge the very useful contributions made by consumers, advisers, their companies and professional bodies, and by other stakeholders.

The Committee appreciates their involvement in the development of the draft Code, and their active participation throughout this comprehensive consultation process.

Ross Butler 
Chairman 
Code Committee

Ends

For further comment, please contact Ross Butler on 021 359 899

New draft Code of Professional Conduct recommended

30 July 2010

The Code Committee today formally recommended that the Commissioner for Financial Advisers consider and approve the Draft Code of Professional Conduct for Authorised Financial Advisers.

The Code specifies 18 minimum standards covering:

  • client care
  • ethical behaviour
  • competence, knowledge and skills, and
  • continuing professional training.

Assuming that the draft Code is approved by the Commissioner, and subsequently by the Minister, it is likely that the first advisers will be authorised from 1 December, with the Code setting minimum conduct requirements for all AFAs.

Committee Chair, Ross Butler, said that the development of the Code reflected useful and pragmatic input from consumers, advisers, financial service companies, professional bodies, other agencies, and a wide range of stakeholders.

“The purpose of the Financial Advisers Act is to encourage public confidence in the professionalism and integrity of financial advisers and brokers. We believe that the Code will assist in achieving that outcome.

“We have written the Code in a clear and concise style, so that consumers and advisers should have no doubt as to what are the minimum professional requirements. The Code consists of overarching principles that outline the obligations that Authorised Financial Advisers have to their clients.”

The Code establishes minimum standards of competence for authorisation. Importantly, it requires AFAs to place the interests of their clients first, and to have the competence, knowledge and skills to provide a financial adviser service. They must also undertake continuing professional training, and are required to maintain a professional development plan.

The Code can be found on the Code Committee’s website – www.financialadvisercode.govt.nz

ENDS

For further comment please contact, Ross Butler, Chairman of the Code Committee (until 3pm today) on 04 472 9830 or after 3pm on 021 359 899.

Update from Code Committee Chairman

2 July 2010

The Code Committee today released the revised draft Code, and sought further consumer and adviser input. The draft document reflects-

  • Legislative changes passed by Parliament last week.
  • Ministerial and other expectations around the timing and outcomes of regulatory change.
  • In particular, the draft Code assumes that regulations will be promulgated under the Act allowing category 2 product advisers such as mortgage brokers and life insurance advisers to voluntarily opt into the authorisation regime.
  • Our decisions on matters raised in submissions and other input – this feedback represents responses to the Committee’s discussion papers and drafts released since August last year.

The Committee notes that-

  • The basic principles, approach and style of the Code remain the same, as the feedback we have received has endorsed the Committee’s direction.
  • There is pressure and an expectation from a variety of sources to get the new adviser regime underway. Timetables for the implementation of the regime’s components are well publicised. In fact, many advisers and organisations are well advanced in anticipation of advisers being able to be authorised from 1 December 2010.
  • Advisers, consumers, training providers, and industry are seeking certainty as to what they need to do to ready themselves for the new regime.
  • We have consulted extensively, and continue to appreciate and take account of the responses we receive.
  • There has also been extensive consultation as part of the recent Select Committee review of the Act.
  • The Code will be used as one of the benchmarks for entities and groups seeking to become Qualifying Financial Entities.

We are offering consumers, advisers and groups a final opportunity to comment on the Code before we recommend it to the Commissioner for Financial Advisers, to ensure that we have fairly addressed all substantive issues in light of the revised scope of the financial advisers’ regime. In doing so, we are conscious of the huge effort that has already gone into making submissions to us, and we are not asking for issues previously raised to be relitigated.

To minimise any further burden being placed on those who have engaged with us in the past, we are happy to receive final feedback and submissions on a relatively informal basis, including by way of debate at public and other forums.

We invite individuals and groups to provide input on this basis, and to do so by 21 July. On Monday, we will advise details of venue and timing for several public meetings. This will include registration arrangements.

And finally, we will be meeting with various consumer groups, professional bodies, companies and industry groups, and training providers.

Early next week, the Code Committee proposes to release a paper outlining the substantive issues that have been raised with the Committee, and our responses to those matters. We will also make available on our website a summary of all submissions received to date.

Input

Please email your input to consultation@financialadvisercode.govt.nz by 21 July, 2010.

Please contact secretariat@financialadvisercode.govt.nz to seek an opportunity to meet with the Committee.

Thanks for taking the time to read this update.

ENDS

Ross Butler 
Chairman, Code Committee for Financial Advisers