The just-approved financial advice code remains a work-in-progress, according to key player in its creation, Angus Dale-Jones.
Dale-Jones, chair of the Code Working Group (CWG), said the trimmed-down document approved by Commerce Minister Kris Faafoi last week would likely face further rewrites.
“There will probably be subsequent consultations as different things go into the mixing pot,” Dale-Jones said. “The current adviser code, for example, has been through three versions.”
The CWG – including all current members – will assume a “monitoring and update mandate” for the new ‘Code of professional conduct for financial advice services’ once the Financial Services Legislation Amendment Act (FSLAA) regime formally kicks off sometime in the second quarter of 2020.
Until then, the extant Code Committee, chaired by David Ireland, retains authority over the current version and could even amend it prior to FSLAA go-live date – although that was unlikely, Dale-Jones said.
However, he said the newly-approved adviser code could be updated relatively early in the FSLAA era with the education standard, in particular, one to watch.
“We’ve already said the investment planning competence standard was an interim one,” Dale-Jones said. “We’re keeping an eye on what’s happening in Australia with their adviser competence standards.”
The Faafoi-stamped code sets an educational baseline for investment planning advice as the “New Zealand Certificate in Financial Services (Level 5) version 2 approved by the New Zealand Qualifications Authority in January 2019”.
Across the ditch, the new Australian advisory body – the Financial Advice Standards and Ethics Authority (FAESA) – has a remit to ensure retail financial advice providers “have completed a bachelor or higher degree, or an equivalent qualification”.
The incoming NZ code included a degree standard for investment planning advice in an earlier iteration but downgraded to a Level 5 attainment in the final version.
Meanwhile, the NZ advice industry faces a minimum nine-month period to prepare for life under FSLAA. Dale-Jones said the nine-month pre-FSLAA window includes a three-month stretch allowing the industry to absorb the code (and provide further feedback) before a six-month slog through the transitional licensing process.
The law allows some flexibility around the nine-month lead-in period but he said the FSLAA regime was expected to come into force in the second quarter of next year – on schedule.
Dale-Jones said the final code has condensed a couple of standards published in the draft version to simplify and more clearly delineate the regulatory border with Financial Market Authority (FMA) responsibilities under FSLAA.
“We shaved the edges off our pieces so they fit better in the [FSLAA] jigsaw puzzle,” he said.
For example, the previous standards requiring advisers not to ‘bring the industry into disrepute’ and to ‘manage conflicts of interest’ have been subsumed under the broader ‘act with integrity’ standard.
“There were some concerns that the code shouldn’t interfere with the legislative requirements around conflicts of interest,” Dale-Jones said.
The Faafoi-finalised code also omits the previous draft standard requiring advisers to ‘resolve complaints’.
“We realised the complaints obligation falls on the shoulders of the advice entities – the financial advice provider [FAP] – rather than individuals,” he said. “And that’s better left to the FMA to pick up in its licensing process.”
The FMA transitional licensing path and the Ministry of Business, Innovation and Employment (MBIE) final disclosure requirements are due to land shortly.