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Revised Code approved for Authorised Financial Advisers

9 September 2016

The revised Code of Professional Conduct for Authorised Financial Advisers (AFAs) has been approved by the Minister of Commerce and Consumer Affairs Paul Goldsmith. Click here (external link) to see the media release. The updated Code will come into force on 1 December 2016.

The key changes

  • The default minimum competence, knowledge and skills standard has been amended to require AFAs to attain the components of the New Zealand Certificate in Financial Services (level 5) that are relevant to their work (Code Standard 16). 

  • Acceptable alternative qualifications identified in the Competence Alternatives Schedule have been revised to reflect the new default minimum standard. 

  • As a transition measure, the old default minimum standard of the National Certificate in Financial Services (Financial Advice)(Level 5) will continue to be recognised for authorisations coming into effect before 1 January 2019.

  • Code Standard 8 has been restructured, with a new Code Standard (Agreeing the nature and scope of service) introduced, and the prescribed requirements that needed to be satisfied to comply with the Suitability Code Standard (now Code Standard 9) have been removed. The previous relief for AFAs acting on client instructions where transactional advice is involved has also been removed, given the new mechanism for agreeing the nature and scope of financial adviser services at the outset. These changes are aimed at improving client access to personalised advice.

  • Code Standard 3 has been amended to clarify that providing a discretionary investment management services does not preclude an AFA from being able to state or imply that they are independent, or that any financial adviser services provided are independent.

  • The Definitions Schedule has been revised to reflect the changes to Code Standard 16 and the Competence Alternatives Schedule, and the end of the transition period for the Financial Markets Conduct Act 2013.

View the Code as recommended to the FMA [PDF, 606 KB]

Revised Code (marked up version) [PDF, 691 KB]

Code Committee members reappointed

1 July 2016

Two members of the Code Committee have been reappointed by the FMA. David Ireland and Gary Young have each agreed to extend their term for another year to 29 July 2017.  The Financial Advisers Act sets Committee membership at between 7 and 11.  Currently it has 9 members. Code Committee members details can be found here.

Final Issues Response Paper on the revised draft Code of Professional Conduct for Authorised Financial Advisers now released

29 June 2016

Following the recommendation of the revised draft Code of Professional Conduct for Authorised Financial Advisers  to the Financial Markets Authority (FMA) in May, the Code Committee’s final Issues Response Paper is now available. This Response Paper sets out the Committee’s responses to the final submissions received in the last consultation round, and provides context for the final adjustments made to the draft revised Code before recommending it to the FMA for approval.  The final Issues Paper includes a summary of all of the key changes to the Code resulting from the Committee’s current formal review process that commenced in October 2015.

Please use the link below to access the Issues Paper:

Response Paper on the revised draft Code of Professional Conduct for Authorised Financial Advisers [PDF, 184 KB]

The FMA has approved the proposed changes to the Code and will  forward the revised draft code to the Minister for his approval.  Following receipt the Minister has 90 days to approve the revised draft code.   Assuming that the draft Code is approved in its recommended form by the Minister, the Committee anticipates that the revised Code will come into force by the end of the year. 

For any questions, the Committee Chair can be contacted on chair@financialadvisercode.govt.nz or mobile 021 343 615.

 

Revised draft Code of Professional Conduct for Authorised Financial Advisers recommended for approval

26 May 2016

The Code Committee for Financial Advisers (the Committee) formally recommended a revised draft Code of Professional Conduct for Authorised Financial Advisers to the Financial Markets Authority (FMA) on 10 May.  The Committee is now working on an issues paper to explain the changes and respond to the final submissions received in the last consultation round. This paper will be released in June.

Key changes include a new requirement for advisers to attain the components of the New Zealand Certificate in Financial Services (level 5) that are relevant to their work, and significant changes made to Code Standard 8. The Committee hopes the Code Standard 8changes will remove some of the perceived barriers to consumers accessing personalised financial advice.

Committee Chair, David Ireland, said that the Committee benefited from a very effective consultation process, with some great suggestions for improvements made in the feedback. 

“We are very pleased with where the final recommendation has landed, and hope that the changes made to the client care standards will make a real difference in increasing the accessibility of personalised financial advice.”

Assuming that the draft Code is approved by the FMA, and subsequently by the Minister, the Committee anticipates that the revised Code will come into force by the end of the year.

All authorised financial advisers are required to comply with the Code which sets minimum standards of competence, knowledge and skills, ethical behaviour, and client care. It also specifies minimum requirements for continuing professional training.   The Code Committee has a statutory obligation to prepare the Code, review it from time to time, and after discharging its consultation obligations under the Financial Advisers Act 2008, recommend to the FMA such changes to the Code as the Committee thinks fit.

For further comment, please contact David Ireland on chair@financialadvisercode.govt.nz or mobile 021 343 615

 

Further Consultation on Code of Professional Conduct: The final exposure draft of the Code now released

24 March 2016

Further to releasing our Issues Response Paper and the Updated Exposure Draft of the Code of Professional Conduct for Authorised Financial Advisers in January, the Code Committee has now met to review submissions received in response to that Exposure Draft. The Committee wishes to thank all submitters for their feedback and their continued contribution to the consultation process for the proposed changes to the Code commenced in October last year.

The Committee is comfortable with the majority of the changes proposed and will be proceeding to recommend them. However, the Committee felt the proposed changes could benefit from a further round of consultation in two key areas – the obligation to ensure suitability of personalised services (the old Code Standard 8) and the alternatives to the financial advice and investment strands of the New Zealand Certificate in Financial Services (Level 5) recognised in the Competence Alternatives Schedule. The proposed changes to Code Standard 8 in particular are extensive, splitting the old Code Standard 8 in two, renumbering the old Code Standard 9, and deleting the old Code Standard 10. The Committee feels this reflects a more principled approach to setting minimum standards for agreeing the nature and scope of services provided and ensuring their suitability, in light of submissions received.

The Final Exposure Draft of the Code is now available to view from the link below, with an annotated marked up version and a clean replacement version provided for ease of reference:

We now invite you to provide your final input into this Final Exposure Draft of the Code, concentrating on the renumbered Code Standards 8 and 9 and the Competence Alternatives Schedule.

Submissions may be made up until 5pm on Thursday, 14 April 2016 and will help inform the Committee’s final recommendations to the FMA.

Please use the submission template available via the link below to share your comments with the Committee.

If you would like to contact the Committee Chair for a discussion then please email chair@financialadvisercode.govt.nz

View the submissions template. [DOCX, 21 KB]

Consultation on Code of Professional Conduct: Issues response paper and the updated exposure draft of the Code now released

Further to releasing our consultation paper in October last year proposing changes to the Code of Professional Conduct for Authorised Financial Advisers, the Code Committee has now met to review submissions. The Committee wishes to thank all submitters for their feedback, and everyone else who participated in the consultation process.

Please use the link below to access the issues response paper and updated exposure draft of the Code. This draft has been updated to reflect the Committee’s consideration of the matters raised by submitters to-date.  

View the response paper [PDF, 282 KB]

View the Code draft [PDF, 693 KB]

We now invite you to provide further input into the updated exposure draft of the Code. Submissions for this input close on 23 February 2016 and will help inform the Committee’s final recommendations to the FMA.  Please use the submission template available via the link below to share your comments with the Committee. If you would like to contact the Committee Chair for a discussion then please email chair@financialadvisercode.govt.nz

View the submissions template [DOCX, 20 KB]

Consultation on Code of Professional Conduct: December 2015 update and submissions

The Code Committee recently completed a formal consultation process regarding some changes we are thinking of making to the Code of Professional Conduct for Authorised Financial Advisers.  We are proposing to adjust aspects of the Code relating to minimum standards of competency, knowledge, and skills to reflect developments in the available qualifications. We are also proposing to make some further adjustments as a consequence of the Financial Markets Conduct Act coming into force, and are reviewing the impact of a couple of the Code Standards on the accessibility of advice.

In embarking upon a consultation process at this time, the Committee was very mindful of the current review of the Financial Advisers Act. The changes under consideration are in the nature of ongoing maintenance to ensure the Code Standards remain fit for purpose in a changing environment.

The consultation paper and formal submissions received appear below. A paper summarising the Code Committee’s response to those submissions, along with an updated exposure draft of the Code and updated anticipated timeline to the changes coming into effect, will be released before Christmas.

Name of Submitter  Submission
ANZ View [PDF, 583 KB]
Auckland University of Technology (AUT) View [PDF, 187 KB]
Chartered Accountants, Australia and New Zealand View [PDF, 601 KB]
Chartered Accountants, Australia and New Zealand View [PDF, 256 KB]
Christchurch Polytechnic Institute of Technology (CPIT) View [PDF, 676 KB]
Forsyth Barr View [PDF, 225 KB]
Hassan & Associates View [PDF, 226 KB]
Institute of Financial Advisers (IFA) View [PDF, 180 KB]
Massey University View [PDF, 402 KB]
The Open Polytechnic of New Zealand View [PDF, 105 KB]
Professional IQ College (PIQ) View [PDF, 84 KB]
Security Industries Association (SIA) View [PDF, 21 KB]
SIFA Incorporated View [PDF, 402 KB]
Strategi Limited and Strategi Institute Limited View [PDF, 177 KB]

 

Consultation on Code of Professional Conduct now closed

The Code Committee has completed a formal consultation process for some changes we are thinking of making to the Code of Professional Conduct for Authorised Financial Advisers.  We are proposing to adjust aspects of the Code relating to minimum standards of competency, knowledge, and skills to reflect developments in the available qualifications. We are also proposing to make some further adjustments as a consequence of the Financial Markets Conduct Act coming into force.

In releasing the consultation at this time, the Committee is very mindful of the current review of the Financial Advisers Act. The changes we propose are therefore in the nature of ongoing maintenance to ensure the Code Standards remain fit for purpose.

Please see the consultation paper below; submissions closed on Friday 20 November 2015.

View consultation paper [PDF, 876 KB]

Code of Professional Conduct for Authorised Financial Advisers

The Code lays down minimum standards of competence, knowledge and skill, ethical behaviour and client care, along with minimum requirements for continuing education and training.

The first version of the Code, which came into force on 1 December 2010, was reviewed by the Code Committee in 2013 in accordance with the requirements of the Financial Advisers Act 2008. As a consequence of that review, changes to the Code were recommended by the Code Committee and a revised version of the Code was approved by the Minister of Commerce on 13 March 2014. The current version of the Code came into force on 1 May 2014.

View the Code [PDF, 2.1 MB]

The 2013 Review of the Code

Following the Code Committee's review of the 2010 version of the Code, a draft version of the revised Code was submitted to FMA on 5 December 2013 for approval. A copy of this draft showing changes from the 2010 version can be viewed here [PDF, 833 KB]. The Code Committee’s response to submission points raised on the 2013 review of the Code can be viewed here [PDF, 1.7 MB], and its response to submission points raised on the exposure draft of the revised Code can be viewed here [PDF, 441 KB].

A summary of the key changes to the Code resulting from the Code Committee's review can be viewed here [PDF, 135 KB].