The Financial Advice Code Committee has announced proposed amendments to the Code of Professional Conduct for Financial Advice Services and is seeking industry feedback on the proposed changes.
The amendments relate to the standards of competence, knowledge and skills outlined in the current Code.
Code Committee Chair, Angus Dale-Jones, who will be part of Financial Advice NZ’s Connect Tour 2024 in July and August, says the proposed amendments reinforce the importance of continuing professional development for financial advisers, which is “…fundamental for the availability and quality of financial advice for all New Zealanders.”
A consultation document released by the Financial Advice Code Committee outlines the proposed amendments to the Code – and its accompanying rationale – to:
- Recognise version 3 of the Level 5 Certificate, noting those who already meet existing requirements do not need to update their qualification
- Retain the Level 5 Certificate qualification outcomes as the minimum standard of particular competence, knowledge, and skill for designing an investment plan, and remove the interim status of Code Standard 7
- Clarify the requirements for continuing professional development in CS9
Dale-Jones notes there are many learning and development activities that financial advisers can choose to build their competence, knowledge, and skill. Those activities include getting additional qualifications, formal courses, informal and self-directed learning, formal mentoring or coaching, and gaining on-the-job experience.
“The bottom line is that the Code’s standards operate in an integrated manner to require financial advisers to do only what they are competent to do.”
Proposal 1: Recognise Version 3 of the Level 5 Certificate
The consultation document says the Code’s minimum standards of competence, knowledge, and skill in CS6 to CS8 currently refer to the qualification outcomes of version 2 of the Level 5 Certificate.
The Services Workforce Development Council recently reviewed the Level 5 Certificate, and the New Zealand Qualifications Authority approved version 3 in May 2024.
“The committee is satisfied that, for the Code’s purposes, the qualification outcomes of version 3 are materially similar to version 2.”
…individuals who currently demonstrate their competence …do not need to update their qualification
It proposes that version 3 be recognised in the Code, but adds that individuals who currently demonstrate their competence, knowledge, and skill by reference to version 1 or version 2 of the Level 5 Certificate, or an equivalent qualification “…do not need to update their qualification or do any bridging course.”
Proposal 2: Retain the Level 5 Certificate Qualification Outcomes in CS7
The committee notes the Code Standard 7, relating to the minimum standard of particular competence, knowledge, and skill for designing an investment plan is currently an interim standard.
The committee’s conclusion is that the current minimum standard in CS7 is appropriate and it proposes to remove the interim status of CS7.
It notes it is reasonably foreseeable that a higher minimum standard of competence, knowledge, and skill could adversely affect the availability of financial advice. In particular:
- Experienced financial advisers understandably may be reluctant to requalify mid-career
- Additional costs may be passed on to clients, which may operate as a barrier to seeking financial advice
Proposal 3: Clarify the requirements for continuing professional development in CS9
The Committee proposes amendments to the Code to clarify the requirements for continuing professional development in Code Standard 9, including the adoption of a more principles-based standard and supplementing the commentary.
Submissions are due by 5pm on Wednesday 14 August 2024 and the committee notes that amendments to the Code must be approved by the Minister of Commerce and Consumer Affairs.
The committee will give an online presentation about the consultation on Thursday 4 July from 10:00am to 12:00pm. Click here to register.
Financial Advice NZ Launches Connect Tour 2024
Advisers will have a chance to hear directly from Dale-Jones at the Financial Advice New Zealand Connect Tour 2024. The Connect Tour will visit six cities across New Zealand starting next month (see: Financial Advice NZ Launches Connect Tour).