In the new financial advice regime, all regulated financial advice must comply with the financial advice Code of Conduct.
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The Code of Conduct
- The draft 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”.
The Code Standards are:
Ethical behaviour, conduct and client care
- Treat clients fairly and act in their interests
- Act with integrity
- Manage conflicts of interest
- Take reasonable steps to ensure that the client understands the financial advice
- Give financial advice that is suitable for the client
- Protect client information
- Resolve complaints
- Not bring the financial advice industry into disrepute
Competence, knowledge and skill
- Have general competence, knowledge and skill
- Keep competence, knowledge, and skill up-to-date
- Have particular competence, knowledge, and skill for designing an investment plan
- Have particular competence, knowledge, and skill for other types of financial advice
The Code Working Group submitted their final draft of the Code of Conduct to the Minister of Commerce on 6 March 2019. They plan to release the Code of Conduct after it is approved by the Minister.
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.
The Code of Conduct is not finalised until it is approved by the Minister of Commerce. The Code Working Group submitted the Code of Conduct to the Minister on 6 March 2019. The Minister has 90 days to decide whether to approve the Code of Conduct submitted by the Code Working Group (until 4 June 2019). The Code of Conduct comes into force on the date(s) the Minister specifies in the Gazette