David Greenslade, Executive Director at Strategi Group, says there will be an increased focus on Continuing Professional Development when all those who provide financial advice must comply with Code Standard 9 of the Code of Professional Conduct for Financial Advice Services relating to keeping competence, knowledge and skill up to date.
Continual Professional Development (CPD) will be more important than ever in 2023 for two key reasons. Firstly, given that FAPs and individuals have had two years to prepare for 16 March we are likely to see an increase in regulatory oversight and an expectation that everyone is fully compliant. Secondly, the environment in which we operate is constantly changing so FAPs and advisers need to regularly upskill to meet new requirements and stay on top of an evolving industry.
Very simply, CPD refers to learning that is continual, relates to training or reading that a professional in the financial services industry would be expected to follow and enhances professionalism (rather than merely just keeping up to date). Importantly, CPD should cover all aspects of what an individual or entity does in their role as a financial service provider.
Who does CPD apply to?
Code Standard 9 applies to both individuals (financial advisers and nominated representatives) and entities i.e., the FAP itself. This means compliance with the Code will be demonstrated slightly differently for individuals versus their controlling entity.
For example, individuals need to have an annual professional development plan (PDP) and a corresponding CPD log that schedules and records their ongoing training, whereas the entity needs to document within their annual business plan how they will review their procedures and systems as they relate to CPD to ensure they maintain the capabilities for financial advice they give.
It is important to note that while directors, managers, paraplanners and compliance staff who do not provide financial advice are not legally obligated to undertake CPD to meet Code Standard 9, Strategi recommends these individuals also have a PDP. Because these individuals play key roles in the business (e.g., managing, overseeing, drafting statements of advice, and assessing financial advice standards etc) it is just as important for them to understand what the requirements are.
This is particularly relevant for directors and senior managers as there is a licence obligation for FAPs to demonstrate how “Directors and senior managers have the competence, knowledge, and skill to perform their role”.
What is involved in meeting CPD?
The key to meeting CPD requirements is to have a PDP, a tool that is used to facilitate CPD including forecasting what is required over a 12-month period. A good PDP will take into account the current business and legislative landscape, identify any competency gaps and any desired competencies that will support the business or individual to perform more effectively. Once the big picture is documented this is then broken down into individual goals, steps and resources required to meet the plan.
Secondary to the PDP but just as important is a CPD log which records what training has been completed and when. This document is crucial to showing that Code Standard 9 has been met.
New industry CPD bible
Of course, this is only a snapshot of CPD and while it doesn’t need to be overly complicated – planning and thought is required.
Strategi Institute has just released a new industry bible called Financial Advice: Continuing Professional Development. The complete handbook 2023 which is a free resource for all those operating within the industry.
The handbook provides full guidance including a simple-to-use methodology for managing CPD and an example PDP which can be customised.
Remember that 2023 is an important year for CPD and as a key industry training provider we want to support the industry by providing resources and guidance to get everyone on track as quickly and simply as possible. Anyone who hasn’t yet received the new handbook is welcome to give the Strategi team a call on 09 414 1300 to obtain a copy.
David Greenslade is the Executive Director at Strategi Group. You can contact the firm on 09 414 1300.