Publications

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

Update from Code Committee Chairman

The Code Committee notes that Parliament has agreed to the Select Committee recommendations and amendments with respect to the Financial Advisers Act.

Finalising the Act is an important milestone. It provides us with sufficient certainty to be able to formally proceed with completing our task of developing the draft Code of Professional Conduct for Authorised Advisers.

We are doing so on the basis that regulations to be promulgated under the Act will allow category 2 product advisers such as mortgage brokers and life insurance advisers to voluntarily opt into the authorisation regime.

We also appreciate that the legislation passed yesterday outlines that the Code will be used as the benchmark for entities and groups seeking to become Qualifying Financial Entities.

Next week we propose to publicly release an updated version of the draft Code. This document will take into account the latest legislative amendments, and will reflect the consultation input we have received from many advisers and organisations.

The Code Committee will then initiate a final series of quick, targeted consultation opportunities, for consumers, advisers, and organisations to submit on any new or outstanding matters. This activity will include public forums in mid-July, meetings with the Committee, and the opportunity to provide formal brief submissions.

Our objective is to have a draft Code available before the end of July for formal presentation to the Commissioner for approval.

We appreciate that many of you, and your organisations, have invested in the future of professional financial advice in New Zealand, and that others are poised to do likewise.

The release of our draft Code next week, the quick, final consultation process, and the formal presentation of the Code, will provide you with the ability to confidently plan and execute the role you will play in the new regime.

ENDS

Ross Butler 
Chairman, Code Committee