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THE FINANCIAL ADVICE CODE OF CONDUCT

Updated 8 July 2020

In the new financial advice regime, all regulated financial advice must comply with the financial advice Code of Conduct. The Code of Conduct comes into force on 15 March 2021.

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The Code of Conduct | The Code Standards | The Code Working Group | Next Steps

The Code of Conduct

The final Code of Professional Conduct for Financial Advice Services was released on 7 May 2019. It is available here. The Code of Conduct comes into force on 15 March 2021.

The Code contains high level principles, not detailed rules.

Each standard contains commentary to explain it, and there are a few examples.
The education standard is one of:

a level 5 certificate in financial services with the financial advice strand, or
existing AFA status, or
demonstrable competence in these qualification outcomes in some other way.

The standard regulated financial advice must meet is “a prudent person engaged in the profession of giving financial advice”.

A person who is a financial adviser registered on the FSPR on 15 March 2021 has a two-year safe harbour to meet competence requirements, until 15 March 2023. This means that until 15 March 2023, a financial adviser may continue to give financial advice that he or she could legally give under the Financial Advisers Act.

The Code Standards

The code standards are in two parts:

Part 1: Ethical behaviour, conduct, and client care

1.   Treat clients fairly
2.   Act with integrity
3.   Give financial advice that is suitable
4.   Ensure that the client understands the financial advice
5.   Protect client information

Part 2: Competence, knowledge, and skill

6.   Have general competence, knowledge, and skill
7.   Have particular competence, knowledge, and skill for designing an investment plan
8.   Have particular competence, knowledge, and skill for product advice
9.   Keep competence, knowledge, and skill up-to-date

The Code Working Group

The Code Working Group is appointed by the Minister of Commerce to write and periodically review the financial advice Code of Conduct. Once the Financial Services Legislation Amendment Bill becomes law, the Code Working Group will become the Code Committee.

The Code of Conduct must contain standards of:

General competence, knowledge and skill for all those giving financial advice;
Specific competence, knowledge and skill for subsets of financial advice;
Ethical behaviour;
Conduct and client care;
Continuing professional development.

Next Steps

Read the Financial Advice Code Working Group and Code of Professional Conduct for Financial Advice Services.

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