CPD change may be a challenge

[UPDATED] Advisers may struggle with the new continuing professional development requirements that will come in with the new version of the Code of Professional Conduct for Authorised Financial Advisers.

Friday, December 6th 2013, 2:19PM

by Susan Edmunds

The Code Committee submitted the new version of the Code to the FMA yesterday for approval.

It is likely to come into force early next year.

Among the biggest changes is a move to require AFAs to complete 30 hours’ structured CPD over each two-year period, from the current 10 structured and 10 unstructured a year.

To count as structured, the training must be proved to be relevant to an adviser’s professional development plan.

Gavin Austin, who used to conduct AFA audits for the FMA and now runs ABC Compliance, said he had noticed a lot of AFAs “collecting credits” without giving much thought to how they worked in with a plan. “There are a lot of lip-service, tick-box attitudes. Not many AFAs have paid a lot of attention to it, they haven’t planned through and stopped and thought about what their strengths and weaknesses were.”

Many had just picked up a template, he said and were focused on getting credits to fill it, rather than doing any real self-analysis.

But he said advisers could use the requirement to their advantage. In his auditing, he had seen a number who did not feel confident defining clients’ investment goals. A course to combat that would count as structured CPD hours under the new system.

Other changes include clarification that code standard one is paramount, a provision allowing AFAs to advise on KiwiSaver withdrawals without sitting investment qualifications, a new code standard for transparently managing conflicts of interest and restructuring the code standards relating to minimum standards of client care.

The version of the code that has been submitted loosens the conflict of interest requirement a bit. It had said that advisers who could not remove all conflicts of interest could not work with a client. But that has been reworded so that only advisers who cannot put their clients' interests ahead of their own or related parties' must not work with those clients.

If the conflict of interest is clearly explained, advisers can still cate for clients in situations such as an IPO where they have a limited number of shares available for their clients and have to pick and choose who to give them to.

« New Code submitted to FMA

IFA working on pro-bono offering »

Special Offers