Five financial adviser associations have jointly submitted their suggestions for changes to the Draft Code of Professional Conduct.
The Association, Financial Advice New Zealand, IBANZ, SIFA, and Triple A collectively stated three main changes to the draft Code.
Firstly, the submission stated the wording and phrases used in the Code need to be strengthened so the reader gains a clear interpretation of their meaning. It included an example, in Code Standard 2, where the phrase “does the right thing”, is stated with no explanation, it claimed.
Continued Professional Development was a second concern of the associations, in that the absence of a minimum requirement for CPD undermines the concept of a Professional Code.
The submission noted 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 each year and to set out principles for the requirements of CPD within the Code.
Financial Advice NZ also noted this in their separate submission (see: Minimum Qualification For All…).
The third concern was that the Draft Code incorrectly suggests that a nominated representative and financial adviser are equivalent.
“This is clearly not the case,” the submission stated. “In Standard 9, the requirement that a financial advice provider 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.”
The joint submission included a further four suggestions to improve the draft Code:
- Investment plans (Standard 11) 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,” it concluded.