by Susan Edmunds
The Code Committee revealed a draft version of the revised code in late January, after a request for submissions.
The new version tries to tackle the problem of advisers being restrained in offering limited advice to clients who do not need a full financial plan. Many advisers find the paperwork burden too heavy to make piecemeal advice worthwhile.
"Personalised advice on discrete issues [is] either proving costly to provide or not provided at all," the committee said. "The overwhelming impression conveyed through the consultation process is that the transactional advice mechanism has not been effective in improving consumer access to personalised advice."
It wants to replace the "transactional advice" concept with a wider "limited advice" idea, with relief from the need to assess suitability when advice is requested on a particular product, without a transactional element.
Committee chairman David Ireland said: “We are very keen to hear from stakeholders whether that is good or bad. We have flown a kite with a proposed alternative approach … we are testing the waters. We are very keen to hear from people either for or against or indifferent.”
The committee said it was also open to feedback on whether the rules around what counts as structured CPD should change.
It had received feedback that the exclusion of product training provided for the principal purpose of promoting a particular financial product from the definition of structured professional development was unduly restrictive.
“We haven’t got evidence of a groundswell of demand for an adjustment,” Ireland said. “But again this is an opportunity to tweak that requirement if it is going to improve the overall environment over the next few years, pending any FAA review coming into effect.”
Ireland said the code changes could have a material impact on advisers quite quickly. The committee will submit a new version of the code to the FMA for approval in March.
But so far it has only received one submission on the draft version and one request for a meeting.
Ireland said there were concerns that, with the revised version being released in January and so much FAA consultation happening, some people who might want to offer feedback might have missed it. “There is a risk that changes to the code that have a more immediate impact on advisers are being overlooked.”
He said the resulting code changes would only be as good as the feedback received. “Anything drafted is going to benefit from broader input and different perspectives to make it as good as it can be. We are hoping people are aware of it and will pay attention. This is something that will come into play later this year.”
Submissions close on February 23.
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