FMA warns code changes must be adopted within months

Advisers must have their business practices updated in line with the new Code of Conduct requirements by March 1, the Financial Markets Authority has warned.

Tuesday, November 15th 2016, 6:00AM

by Susan Edmunds

The new version of the code comes into force on December 1.

One of the key changes made is that it has separated the existing code standard eight, covering suitability of advice, into two standards.

This is designed to address concerns that the existing rules were making it too difficult for advisers to offer anything less than a full financial plan for clients.

It also updates the code in line with new qualifications available and makes it clear that DIMS providers can asset their independence and that of their processes.

The FMA said AFAs would need to review and update their adviser business statements, specifically around how they would comply with the new code standards eight and nine.

Eight now requires that when providing a financial adviser service to a retail client, an AFA must agree with the client the nature and scope of the service to be provided.

Nine says that when providing a personalised service to a retail client an AFA must take reasonable steps to ensure that the personalised service is suitable for the client, “having regard to the agreed nature and scope of the personalised service provided”.

“Think, for example, how you and your clients reach agreement about the nature and scope of the services to be provided,” the FMA said.

Any changes in the processes would need be reflected in the ABS, it said.

Advisers would also need to align their advice and record-keeping processes with the revised standards of client care and keep relevant records, as required under code standard 12, which requires that AFAs record in writing adequate information about any personalised services provided to a retail client.

“We want to ensure that the new code supports the professionalism of financial advisers and helps you to deliver the best client outcomes,” the FMA said.

“We will continue to engage with AFAs and professional associations to make sure we are aware of any issues. If you have any issues or questions about the revised Code, we would welcome your feedback.”

Tags: AFA Code Committee