With the Code Working Group’s two-week adviser consultation roadshow at an end, its chair Angus Dale-Jones discusses with RiskinfoNZ the key issues raised by advisers in attendance and what’s next…
How did the roadshows go overall?
Angus Dale-Jones: We were really happy that so many people took time out of their days
to come and listen but more than that it was great having so much participation during presentation. We got lots of feedback and ideas. The big message that we wanted to get out in addition to that this is the listening phase for us, is to stress that this is a high level conceptual consultation – it’s not about the wording of individual standards. It’s to get people thinking about broad ideas. You could see with people’s interactions that they really responded well to talking concepts and talking ideas and that really opened up some great conversation.
What were the key issues advisers raised during the roadshows?
ADJ:
- Good Advice Outcome: We developed this idea of a ‘good advice outcome’, so that in all situations it didn’t matter how small the advice was, you still had to put the retail client first and make sure the retail client was getting a good advice outcome. On the one hand, we got really positive feedback that that consistent approach in all advice situations was a good start. On the other hand, we got quite strong feedback that the word ‘outcome’ confused people between the outcome of the advice process and the outcome of the financial product itself. So our initial reaction is that we will have to find a word other than ‘outcome’ or drop that word completely and just talk about ‘good advice’ and we found that incredibly useful feedback.
- Ethics: For each of the different areas we had lots of different ideas about ethical behaviour and people understand what we’re trying to do but there are a range of views; some people prefer an approach to ethical behaviour closer to the current code whereas other people like the idea of the Financial Advice Provider being given some discretion to have their own Code of Ethics and to using more novel ways to remind people of their ethical responsibilities.
The single most useful thing RFAs could do in submissions to us is say ‘this is how I think I can demonstrate that I am competent’
3. Conduct and Client Care: Generally every audience seemed to understand that we needed to move the thinking away from the individual adviser and think about the advice business and the advice environment created around advice-giving to support good advice. I think conceptually, people support that idea – that was the sense I got from consultation, but again we’re waiting to hear what submissions say.
4. Competence: There was a high level of interest about the competence part of the presentation. We were trying to distinguish between less complex and more complex advice situations and we used an advice type difference differentiating between product advice and financial planning. There was lots of confusion around what each of those terms meant; people understood that there is a whole range of advice situations and different situations require more or less competence and they supported us with that – but there was quite a lot of feedback that we would need to find a way about being clearer about what we defined in the code as a complex and a less complex environment – this distinction between financial product and financial planning needs to be clearer.
Virtually everybody shared and understood the difficulty of finding a pathway to migrate people with many years of experience into the new regime. How do you recognise their experience in a measurable way? And the impression I got is that a number of attendees have gone back to think about that in more detail and think about constructive suggestions about how a pathway for RFAs might be established.
What would you tell advisers at this point, who are concerned about competency standards proposed in the draft code?
ADJ: There are parallel messages to different audiences: to AFA’s, it’s to reassure them that on competence and everything else in the code, we’re actually proposing very little change. So for AFAs, it’s in essence business as usual. For RFAs, many RFAs in terms of their business process are already following the code. The issue for RFAs…comes about from competence and what we need there is to get as many examples as possible of how people think they can measurably demonstrate that they’ve got competence – by measurably demonstrate, we mean it’s got to be more than saying ‘I’ve worked for 10, 20 or 30 years.’
There’s got to be ways of showing how you are competent and the single most useful thing RFAs could do in submissions to us is say, ‘this is how I think I can demonstrate that I am competent’. Also many RFAs have gone and done quite big elements of Level 5 already and their feedback has been a lot of Level 5 hasn’t been particularly relevant to the work that they do. So the message there for us is to work with the education providers to get different flavours of Level 5 available so that the different specialities have Level 5 training appropriate to them.
Do you expect the final code to look quite different to the draft code based on feedback and submissions?
ADJ: The central message there is we have not shown anybody any wording of standards because we haven’t tried to word a single standard yet. We’ve talked about the conceptual thinking and we’ve deliberately done that because we’re trying to promote discussion and debate – we’re trying to hear what aspects of our conceptual thinking feel right to people and what feels wrong.
Next steps from here?
ADJ: Our real mission for the next four weeks is to do as little as possible so that we give people a chance to think about what we’ve written in the consultation and respond to it and listen. The biggest thing that people can do is respond with a written submission suggesting ideas about how our approach to drafting the code could be improved.
The fortnight of roadshows concluded on 28 March and were attended by 805 advisers in total. Submissions close on 30 April and further details can be found here.