One month until Code kicks in

Advisers have a month from tomorrow before the new Code of Professional Conduct comes into effect – but a “bedding in” period is expected to allow for some adjustment.

Monday, March 31st 2014, 6:00AM

by Susan Edmunds

The new version of the code was approved by Commerce Minister Craig Foss last week.

No changes were made to the document submitted by the Code Committee, beyond minor typos and formatting changes.

Committee chairman David Ireland said the Financial Markets Authority had been making encouraging noises about a grace period for advisers adjusting to the new rules.

Major changes include new requirements for continuing professional development (CPD) training, a provision allowing AFAs to advise on KiwiSaver first-home withdrawals without sitting investment qualifications, a new code for transparently managing conflicts of interests and restructuring of the standards relating to minimum standards of client care.

Ireland did not expect advisers to panic or rush to change their systems. “The changes are not such that they should necessitate huge changes in systems… I would expect AFAs to adjust their ABS over the year to reflect the new version of the code.”

He said he expected guidance from FMA about how it would look for evidence of compliance.

Angus Dale-Jones, of the PAA, said many of the changes would take effect over time, not immediately - such as the new conduct requirements in dealing with clients.

Advisers would not have to go back through their files to make changes in line with the new rules but instead would implement the changes when they dealt with new clients or held reviews with existing ones.

He said the extensive consultation process last year meant the changes would not be a surprise to the industry.

Some of the broader changes that would have meant big adjustementshad not made it through that process, such as the proposal for a KiwiSaver-only adviser. “That’s been put on hold until the relevant parts of the national certificate are revised.”

The consultation period had been useful to advisers to explain the Code Committee's thinking on issues, he said.

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