Financial Adviser Associations have jointly submitted on the Draft Code of Professional Conduct, stating that key changes are needed to support public confidence and trust.
Clear and concise definitions are essential to provide clarity for those providing financial services, and most importantly, to mitigate risk for New Zealanders. In general, the wording and phrases used throughout the Code need to be strengthened so a clear interpretation of their meaning can be obtained. For example, in Code Standard 2, “does the right thing” is stated baldly with no explanation.
Continued Professional Development is a key cornerstone of professionalism; the absence of a minimum requirement for continued professional development (CPD) undermines the concept of a Professional Code. There should be a requirement for financial advisers and nominated representatives to create an annual CPD plan, complete a minimum number of 15 CPD hours p.a. The Code should set out principles for the requirements of CPD.
The Draft Code incorrectly suggests that a nominated representative and financial adviser are equivalent. This is clearly not the case. In Standard 9, the requirement that a FAP determine learning outcomes and have processes and procedures in place for nominated representatives, is very obviously different from the requirement that financial advisers meet the NZQA qualifications.
In addition, the joint submission highlights that the Code needs to be strengthened as follows:
- Investment plans should only be provided by qualified financial advisers. Allowing unqualified nominated representatives to provide an investment plan goes against the intent of the Code, which is to build public confidence and trust.
- Managing conflicts of interest (Standard 3): This standard is about managing conflicts of interest, not avoiding conflicts of interest. Both the first bullet point – “where practicable, avoid conflicts of interest” – and the reference to the legislation should be removed.
- The example in Standard 4 is not appropriate. As it stands, the example begs the question: “if the benefits are similar, why would you be changing the policy?”
- Standard 7 should include: “A person who gives financial advice must provide clear procedures for resolving complaints by clients through both internal and external complaints processes,” and the commentary should make it clear that it is only after the inability to achieve resolution in the internal process, that the complaint be referred to the EDRS.
The effectiveness of the Code Standards is essential to ensure financial advisers and nominated representatives are professional, put the interests of New Zealanders first and to build confidence and trust with the New Zealand public.
The joint submission on the Draft Code of Professional Conduct was made by The Association, Financial Advice New Zealand, IBANZ, SIFA, and Triple A.
For more information:
Simon Manning – CEO, The Association – 021 272 8967
Katrina Shanks – CEO, Financial Advice New Zealand – 021 474 010
Gary Young – CEO, IBANZ – 027 543 0650
Murray Weatherstone – Co-opted Member for Advocacy – 021 446 110
Wayne Smith – CEO, Triple A – 021 433 047