Industry Response to ‘Succinct’ Draft Code


The draft Code of Conduct released last week by the Code Working Group has been welcomed by industry stakeholders, particularly for its concise and plain language style.

The 12 proposed standards in the ten-page draft include requirements for advisers to:

  • Treat clients fairly and act in their interests
  • Act with integrity
  • Manage conflicts of interest
  • Take steps to ensure the client understands the advice
  • Give advice that is suitable for the client
  • Meet standards of competence, knowledge and skill
Code Working Group Chair, Angus Dale-Jones

Speaking to RiskinfoNZ, Code Working Group Chair, Angus Dale-Jones, said one of the key things they aimed to achieve was to write the Code with principles that offered flexibility.

“So you can comply in a very straightforward way but you can also comply through a more complex path,” he said, while making sure the Code was readable for consumers.

Financial Advice NZ CEO, Katrina Shanks, congratulated the CWG members for listening to feedback from the previous consultation, noting that keeping things simple is better both for those within the sector and outside of it.

Financial Advice NZ CEO, Katrina Shanks

“Simple english and easy to understand – I think they have achieved that in this Code,” Shanks said, but added that some areas would need more explanation to clarify meaning, and that the feedback directed towards the CWG in the coming weeks would highlight those areas.

Chatswood Consulting’s, Russell Hutchinson, commented on his website that the draft Code is a much more accessible document.

“The document should be readable by clients, and allow them to use it to judge whether the service they are getting meets the Code,” he wrote.

Industry members previously had concerns about whether higher level qualifications would be required and who would need them (see: Industry Consultant’s Reservations on Code Competence Requirements…).

However, higher level qualification was only mentioned in a commentary note under Standard 11, noting that it is an interim standard.

The Code Committee intends to consult in the future on whether higher qualifications should be required to demonstrate particular competence, knowledge, and skill for designing an investment plan for new entrants to the sector after a future date.

“At the moment, we’re only talking about investment planning,” Dale-Jones said of higher qualification prospects. “But MBIE has the ability to expand that to other types of financial planning, but then there would be a full consultation process around that.”

In a consultation note under Standard 9, the draft Code states:

The CWG intends to review the latest version of the Level 5 qualification in force at the time the draft code is submitted to the Minister for approval and, if satisfied that its qualification outcomes are appropriate, specify that version in the code.

Dale-Jones said that this refers to the review of the Level 5 qualification which happens to be underway this year, which he said was convenient timing but completely independent of the Code and FSLAB.

He said when the CWG recommends the Code to Minister Faafoi, they will run with the newest version of the Level 5 qualification.

Dale-Jones added the CWG is very interested in hearing from advisers on how the Code will apply practically to their businesses.

Click here to read the consultation document and make a submission.

Consultation closes on Friday, 9 November 2018.