Dale-Jones: Judge us on our transparency

The chairman of the working group set up to develop a new industry code of conduct has deflected criticism of a lack of adviser involvement.

Wednesday, August 9th 2017, 2:58PM

You obviously put your hand up to get on the Code Working Group?

Yes. There was an application process and I was lucky enough to get the Chairman role.

Did you apply yourself or were you nominated?

I applied myself.

Why were you interested in getting involved in it?

It’s an industry that I’ve been closely related to for a while and it’s a continuation, if you like, of some of the work that I had done when I was at the Securities Commission (as it was then) and as a consultant since then. I feel passionately about this industry and I thought that this was a way that I could continue to help.

We’ve had the Code Committee, which has provided a set of rules for AFAs up until now. The next stage will be this Code, which will be the Bible for advisers and what they have to act by. It’s going to apply to everyone. How engaged are RFAs in this space at the moment?

We’ve actually got two Codes in parallel. There’s a transitional period, where the Code Committee and Code that currently exists continues to apply. That applies to AFAs. RFAs, at the moment, if they want to think about how they practice, can still look to the existing Code to get some good ideas. The Code Working Group is a process to set up a new Code, and the difference will be that that new Code will apply not just to AFAs, but to all financial advisers.

Should all the people outside of the Code at the moment look to what AFAs have to do as the minimum requirement going forward?

I think it’s useful for them to use it as a starting point, to think about what Code standards look like. Some requirements of the Code might not apply to them at all, but in terms of some ‘Subject Headings’ to think about, it’s a good starting place.

There’s been a lot of criticism about the make-up of the Committee, in that there’s no practical experience there, in terms of day-to-day advisers who meet clients face-to-face. What’s your answer to that?

I think I’m probably the least relevant person to ask that question. I applied on the basis that it would be a committee chosen by the Minister, based on advice from MBIE, and that I would work with that committee. I’ve got to say, from a Chair point of view, I’ve got a team of really skilled people on the Committee. Better than that, we’ve got to make sure in our consultation process that we’re fully engaged with the financial advice community. I understand completely that that’s different from having financial advisers on the Committee, but judge us on our transparency and judge us on how engaged we are with financial advisers.

Did you know that you were going to be the Chairman?

I had no idea that I was going to be the Chairman.

Did you have any input into the make-up of the group?

None whatsoever. In fact, less than 24 hours before everybody heard, I was told who the others were!

What was your initial reaction when you saw the group, and there weren’t practicing advisers there?

I didn’t have any expectations on who should be on the Committee. What I like about the group is that it will help us tap into parts of financial services that the current Code has not needed to think about.

But when you look at the group, there’s not a lot of people involved in the mortgage space either, for example. How are you going to fill those holes?

We need so much input through consultation. I can see that that is sidestepping your question. Remember, the Working Group is a catalyst, if you like. It is there to make sure that we ask the right questions in consultation and distill those questions.

Don’t you have a fundamental issue in the fact that we’ve had so much change going on and people are sick of consultation? At some stage, aren’t they going to say that they just need to get on and run their businesses?

That’s why we need to look closely at the work that has been done over the last eight years. There’s been heaps of consultation on what a good set of standards for advisers looks like. That’s been done in the context of an occupational code for Authorised Financial Advisers. Now, we broaden into what is a service code for the giving of financial advice. It applies to many more people - people in organisations, people who are using digital or digitally-assisted advice – and it’s stretching those contexts to this broader audience. It’s not so much drowning them in consultation as making sure that we are just the ‘thinking’ of the Code.

We’re going from a Code on individual advice to something which is more service-based?

Yes. This is no longer an occupational Code. The current Code Committee is a little constrained, because all that it can touch, essentially, is ethics, the advice process and the credentials and competence of the adviser. We can now look at the advice service as a whole. Remember, this legislation is now moving into the Conduct Act. It’s much more about customer outcomes. It’s looking at everything that’s put into play to get a good customer outcome. It might be that we don’t need to do the heavy leaning on the advice process. In some circumstances, that is currently done.

The occupational code – what the AFAs have to do – is that going to be chucked out? Are we starting all over again?

It is a fantastic starting point. We have a huge advantage over the existing Code Committee, which was a different form with different people eight years ago. They had nothing to start with, other than looking at some ideas from the industry and some ideas from overseas. Now, we have a Code that’s been trialed, consulted on in detail and, by all accounts, is working really well. This is about understanding that the context is now broader, and making sure that what we come up with stretches into that context in a sensible way.

One of the big debates is on advice vs product vs service. Have you got any thoughts about that?

Our number one mantra is customer outcome. We’re now sitting in conduct legislation. In fact, the nexus between product and advice is a close nexus in many instances. It’s understanding how those work together to get a good customer outcome. That will drive how we shape the Code.

There’s also been criticism of the fact that ‘the big end of town’ seems to have captured a lot of this process. What are your thoughts on that?

Well, the process hasn’t started yet!

It’s being said based on the make-up of the Committee.

I understand that. All I can be accountable for is how we engage in the consultation process. We’ve got some great minds around the table in the Working Group. I’d like to be judged on how we engage with people.

How happy are you with the make-up of the group?

In terms of having people with good ideas, innovative input, being able to touch parts of the industry who haven’t previously needed to be involved in the Code – I think it’s a fantastic group of people.

You’re happy with the make-up?

I’m very happy with the make-up.

You’re allowed 11, and you’ve got nine. You can still add another two?

That’s a choice for the Minister, not for me, but we can structure the consultation process in any way that we want. We can find any mechanism for including advisers. It is really important that mortgage advisers, insurance advisers and people who haven’t been directly touched by the AFA code are fully involved in expanding this to a context that works well for them.

How engaged have you been with the Minister on this?

Well, I was an applicant for a job and I was chosen! Now, the ball is handed over to us and we run with that ball over the next 10-12 months.

You originally came to New Zealand from ASIC in a role that was helping to set up the Financial Adviser’s Act. You were a regulator, and now you’re on this other side. Does that say that the regulator is taking over this process?

The last time I wore a regulator hat was in early 2011.

It might still be ingrained in you, though?

There are aspects of being a regulator that stay ingrained, but the central aspect is a behavioural one. It’s trying to work with people to come up with behaviors that benefit everybody, that benefit advisers - some of the things that give them headaches are listened to and responded to constructively – but that also benefit customers and consumers.

Tags: AFA Angus Dale-Jones ASIC Code Committee Code Working Group conduct financial advisers GRTV MoBIE Mortgage Advisers regulation RFA