In the financial advice regime, all regulated financial advice must comply with the Code of Professional Conduct for Financial Advice Services, which came into force on 15 March 2021.
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The Code of Professional Conduct for Financial Advice Services
The final Code of Professional Conduct for Financial Advice Services (Code of Conduct) was released on 7 May 2019 and came into force on 15 March 2021. It is available here
The Code of Conduct 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 that regulated financial advice must meet is “a prudent person engaged in the profession of giving financial advice”.
A person who was 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 2008.
The Code Standards
The code standards are in two parts:
Part 1: Ethical behaviour, conduct, and client care
1. Treat clients fairly
Part 2: Competence, knowledge, and skill
2. Act with integrity
3. Give financial advice that is suitable
4. Ensure that the client understands the financial advice
5. Protect client information
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 Committee
The Code Committee is appointed by the Minister of Commerce to write and periodically review the Code of Conduct. Before 15 March 2021, the Code Committee were the Code Working Group.
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.