The Code Working Group (CWG) is pleased with how the Select Committee’s amendments to the draft Financial Services Legislation Amendment Bill (FSLAB) have reflected the suggestions the CWG made in its submission.
Code Working Group Chair, Angus Dale-Jones, says his CWG colleagues had been waiting for the report back to Parliament by the Select Committee so that any changes in the proposed legislation could flow through into the draft Code.
“There is nothing in the FSLAB changes from the Select Committee that undermines the things that we consulted on earlier in the year,” he said.
Significant changes to FSLAB that the CWG welcomed (stemming from its own suggestions and from other parties) included:
- Broadening the application of the Code to those who give advice rather than just the moment in time that advice is given
- Retaining language about professionalism
“…we think that’s really inspirational and good for the financial advice sector to see itself as, and aspire to be, a profession,” said Dale-Jones.
MBIE this week released a report responding to the FSLAB submissions (see: Commissions to Stay…).
In responding to the CWG’s submission point on broadening the application of the Code, MBIE agreed an amendment was needed.
“As currently drafted, the use of ‘when financial advice is given’ suggests that the code standards only apply at the moment financial advice is given. This is not the policy intent,” MBIE stated in its report.
“We recommend that the Bill be amended to clarify that the code applies to conduct by persons who give financial advice.”
Other less significant, albeit welcomed, changes in the proposed legislation included:
- Narrative relating to continuing professional development instead of training requirements
- Clarification around giving priority to client’s interests and wording around the nature and scope of advice
“These are both things that had existed within the old Code and have now been elevated to the level of legislation and they give a flavour to how the Code operates,” Dale-Jones said.
Next steps
The CWG’s next task will be to publish the draft standards themselves, following on from their earlier consultation which dealt with concepts.
Dale-Jones said both the Select Committee report and the CWG’s own consultation submissions were important sources during this process.
The industry will be able to see what the wording of these standards will look like and can then submit their thoughts.
After that the CWG will assess if they have enough information to make a recommendation to the Minister about a draft Code.
Dale-Jones said he is not in a position to commit to a timeline currently but said they are working to give people certainty about what the Code standards are likely to look like as soon as possible.