Code formally recommended to the commissioner
The Code Committee has formally recommended that the Commissioner for Financial Advisers David Mayhew consider and approve the Draft Code of Professional Conduct for Authorised Financial Advisers (AFAs).
Friday, July 30th 2010, 2:00PM
by Jenha White
Mayhew said receiving the draft code was a significant milestone in the implementation of the new regulatory regime governing financial advice to the investing public.
“The code will play an important role in establishing the professionalism and integrity of financial advisers. The next step is for me to review the draft code to consider whether to approve it or not. If I do approve it, then I must forward the draft code to the Minister of Commerce for his approval.”
Although the act allows up to 90 days for the task, Mayhew expects to complete his review by the middle of August.
Mayhew observed that in substance he will have to satisfy himself through a high level review that the committee has complied with its consultation obligations and that the draft code it has prepared is consistent with the act.
Assuming that the code is approved by the commissioner and subsequently by the Minister of Commerce Simon Power, it is likely that the first advisers will be authorised from 1 December, with the code setting minimum conduct requirements for all AFAs.
Code Committee chairman Ross Butler said the level of consultation undertaken by the Code Committee has more than satisfied the requirements of the act.
There have been three discussion papers, four series of public meetings, three code versions, numerous meetings with consumers, financial service companies, professional bodies and other agencies, as well as consideration of global experiences.
Butler appreciates the level and style of engagement that has gone on.
“The input has been positive, useful and pragmatic which has made our job a lot easier in coming up with a code that satisfies the consumer confidence test and recognises good commercial processes and proceedings.”
He said the code means that consumers will be able to have a clear perspective of the behaviour they can expect from an AFA.
He acknowledges that in the past there were a range of codes of ethics from professional associations and their powers were limited to finding a member who didn’t comply, requiring that they undergo training or at the worst, expulsion from the association.
“In this process, in the event of substantial non-compliance, the discipline process can have some quite harsh steps,” Butler said.
The penalties the Securities Commission has the power to impose include removing the ability for an AFA to act as an adviser.
Butler said the purpose of the Financial Advisers Act is to encourage public confidence in the professionalism and integrity of financial advisers and brokers and the committee believes that the code will assist in achieving that outcome.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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