Missing members: concerns raised over legality of code committee

• Tweet

The committee which sets professional standards for financial advisers appears to be in breach of its own laws.

Friday, April 1st 2022, 6:00AM 4 Comments

by Jenni McManus

The code committee set up as an independent body to draft and monitor standards of professional conduct for financial advisers is operating without a full complement of members, in apparent breach of the Financial Markets Conduct Act 2013.

According to the legislation, the committee must have no fewer than seven members, two of whom must be consumer affairs representatives or skilled in dispute resolution. The current committee has only six members, including only one consumer affairs/disputes person, meaning it would seem to be operating unlawfully.

The problem arose in July 2021 when three committee members came to the end of their terms. Eight months later, they have not been replaced.

Replacing them has now become urgent. Three of the current committee are due to finish their terms in July this year, meaning that from 1 August four new members will be required for the committee to operate legally.

Concerns are now being raised, with at least one market-watcher writing to Commerce and Consumer Affairs Minister David Clark, asking for an explanation.

Part 4, Schedule 5 of the Act puts the onus firmly on the minister to ensure the number of committee members doesn’t fall below seven – the statutory minimum. Section 26(1)b uses prescriptive language such as “must” to spell out the minister’s obligations.

Clark was contacted for comment on why the positions have not yet been filled, whether the committee was operating unlawfully with less than a full complement and whether the minister had concerns about the situation.

A week after we contacted Clark’s office, there has been no response.

Code committee chairman Angus Dale-Jones confirmed that committee appointments were a question for the minister.

He says he understands a process is in train to appoint new members but is unsure about when any appointments might be made. “It is going through the normal government recruitment process,” he said.

Dale-Jones said the issue would be more significant if the committee needed to consult or recommend changes to the code. Right now, that wasn’t the case. Instead, his focus was on FSLAA and bedding in the licensing regime for advisers which comes into full force in March next year.

The code committee was set up in 2017 with nine members and tasked with developing the code of professional conduct. This was approved by the minister in May 2019.

Tags: Angus Dale-Jones Code Committee David Clark

Comments from our readers

Sign In to add your comment