The Code Committee Working Group (CWG) has launched into focus group mode as a precursor to rewriting the rules for the soon-to-be expanding NZ regulated financial advice market.
Angus Dale-Jones, CWG chair, said the steering committee had already had some “informal discussions” with a number of interested parties but would assemble and meet with a handful of fit-for-purpose focus groups over the next couple of months.
“We don’t yet know exactly how many focus groups we will have – at least five or six, probably more,” Dale-Jones said. “But we want to get a broad cross-section of the bigger range of stakeholders.”
He said the focus groups would include sub-sectors including banks, insurers, financial advisers, dispute resolution providers and fund managers.
“We expect the focus groups should have between 10 to 15 members each – maybe the funds management group will have slightly more,” Dale-Jones said. “If they’re any bigger then the conversation that we want probably won’t happen.”
While some focus groups will draw on a self-evident pool of potential members – such as financial advisory industry bodies – he said there were still several grey areas to be clarified.
The funds management focus group would be based on the industry forum currently chaired by Nikko Asset Management NZ head of compliance, Tim Morrison, Dale-Jones said.
“We realise that doesn’t cover all [fund management] stakeholders but it is a key part of the industry,” he said.
The CWG has slated the focus group meetings for later this month and through November with the aim of developing an outline for a formal consultation process early next year.
“Rather than produce a static document we wanted to created an informal environment where key stakeholders can bounce ideas around,” Dale-Jones said.
However, the CWG has produced a general guideline to the focus group process that will centre on three main areas: general principles of the new code; particular competency, skills and knowledge standards; and, ‘other minimum standards’ including ethical behaviour rules.
“Given the breadth of situations that the Code will apply to, we are approaching the consultation process with no preconceptions as to outcomes, and our desire to not stifle input to us is reflected in the deliberately open nature of the questions on which we are seeking feedback,” the CWG guide says.
“As far as is practical, we want to conduct the consultation in focus group-type situations to maximise the free flow of ideas and interaction amongst participants (however, we are happy to receive written submissions if any participants prefer).”
Dale-Jones said the CWG has also yet to determine what form the final consultation process would follow next year.
“There are a variety of ways to engage,” he said.
The CWG has until next August to produce a new financial adviser code of conduct that will cover the much-larger population to be captured under the Financial Services Legislation Amendment Bill (FSL). Introduced into Parliament in July, the FSL is expected to be passed into law next year.
Under the FSL all individuals deemed as financial advisers will be subject to the new code rather than the narrowly-defined authorised financial advisers (AFA) answerable to the current code of conduct.
“The new code will move from the previous occupational model to a consumer-centred service code, covering all forms of financial advice in all markets,” Dale-Jones said. “There’s no easy language to describe the whole spectrum… no jurisdiction in the world has got financial adviser rules exactly right.”