The recent Code Working Group (CWG) series of 11 roadshows around the country drew an estimated total crowd of about 750, according to chair, Angus Dale-Jones.
Dale-Jones said the roadshows attracted a broad mix of authorised financial advisers (AFAs), registered financial advisers (RFAs), institution-based advisers and other industry participants.
“There was great adviser participation,” he said, “and most understood that we were consulting on concepts rather than detail at this point.
“Get the wording right in the code will be covered in the next round of consultation.”
However, one early casualty may see the final word scratched from the draft code principle one targeting ‘good advice outcomes’.
“Outcomes has been problematic so will likely be out from the code,” Dale-Jones said. “The simplest solution is just to cross out the word and leave it at ‘good advice’.”
Semantics aside, he said the draft code was staking out new ground with a requirement for all advisers to consider “the client in every advice situation, and to ensure that good advice is given to them”.
“We have deliberately not proposed to reintroduce a concept equivalent to class service [as per the current Financial Advisers Act] or general advice as in Australia,” Dale-Jones said. “Our consultation proposes that in all advice situations the client’s reasonable expectations must be considered and met, and then documented, either for the individual client or generically for a group of clients.
“I am not aware of this approach being taken anywhere else.”
The new code will set ethical and competence standards across the entire financial advisory industry to be captured under the Financial Services Legislation Amendment Bill (FSLAB). FSLAB essentially co-opts all financial advisers under the Financial Markets Conduct Act (FMC) regime.
FSLAB should pass into law later this year with the accompanying code originally scheduled for sign-off by August – although that deadline may be a little optimistic.
“The challenge is to word the code and its minimum standards in a manner that enables unambiguous compliance with, and enforcement of, this requirement,” Dale-Jones said.
However, the CWG has drawn fire from certain quarters of the advisory industry – in particular, smaller independent advice firms – concerned that the proposed rules favour institutionally-owned operations.
For example, last week high-profile independent financial adviser, Murray Weatherston, lobbed a complaint to the Commerce Minister, Kris Faafoi, regarding the lack of adviser representation on the CWG.
It is understood Weatherston is mulling further complaints against the CWG.