Code Committee proposes changes
The Financial Advice Code Committee is proposing changes to the standards of competence, knowledge, and skill in the Financial Advice Code.
Tuesday, June 25th 2024, 9:31AM 
4 Comments
The Code is part of the Financial Markets Conduct Act regulatory regime for financial advice. It sets the conduct standards for everyone who gives financial advice.
Code Committee Chair Angus Dale-Jones said: “Financial advice provider businesses must take all reasonable steps to ensure that their financial advisers have the competence, knowledge, and skill for the advice they give.”
“The proposed amendments reinforce the importance of continuing professional development for financial advisers. That’s fundamental for the availability and quality of financial advice for all New Zealanders.”
There are many learning and development activities that financial advisers can choose to build their competence, knowledge, and skill. Those activities include, for example, getting additional qualifications, formal courses, informal and self-directed learning, formal mentoring or coaching, and gaining on-the-job experience.
“The bottom line is that the Code’s standards operate in an integrated manner to require financial advisers to do only what they are competent to do.”
The Committee’s consultation document also proposes amendments to formally recognise the recently approved version 3 of the New Zealand Certificate in Financial Services (Level 5) and to retain the Level 5 Certificate qualification outcomes for Code Standard 7 (minimum standard for investment planning competence).
Amendments to the Code must be approved by the Minister of Commerce and Consumer Affairs.
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Comments from our readers
we have to be mindful of conflict of interests.
there are advisers who were told by a particular provider in the past to do a particular course. when asked if it's compulsory, were only told that it is "advisable" to do it. then found out that they don't need to do the course.
When we talk about the competence, knowledge, and skill for the advice all financial advisers provide to their clients a lot of this comes via the providers themselves nowadays through the adviser updates we regularly receive. The lenders in particular do a great job of keeping mortgage advisers up to date of any changes made to their respective home loan policies. Speaking for myself but I’m sure a great many other mortgage advisers these “lender updates” are far more valuable and relevant to me as a source of CPD than anything someone like Strategi could ever provide. Best of all they are “free” to any accredited adviser. I get very little value sorry from the CPD courses on offer “at cost” from aggregators or industry bodies.
I just think it’s important that when the Code Committee is proposing changes to the standards of competence, knowledge, and skill in the Financial Advice Code they consider who will be the main beneficiary of these changes. An organisation like Strategi etc. or the adviser themselves and the advice his/her client subsequently receives.
@ w k - Yes. I bet I can guess who you are talking about. Their scaremongering was phenomenal.
this provider must be quite famous by the sounds of it. having to resort to scaremongering tactics, business must have been tough out there.
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1. Recognise version 3 of the Level 5 Certificate. Those who already meet existing requirements do NOT need to update their qualification.
Expanding on this, the consultation document states:
"...the Committee intends to ensure that individuals who currently demonstrate their competence, knowledge and skill by reference to version 1 or version 2 of the Level 5 Certificate, or an equivalent qualification, do not need to update their qualification or do any bridging course."
I'm pleased that this has been clarified. When the review was first announced on Good Returns on 15th November last year, David Greenslade of Strategi Institute, who also sits on the working croup consulting on the review, was quoted as saying:
"There will be bridging modules between versions 2 and 3 that current advisers will be able to do as part of CPD. No-one says you'll have to do it right away. That's why there will be a phasing period of 18 months to two years."
At the time I read this to mean that those with NZCFS L5 V2 would need to complete a bridging module within a certain period of time. (Is there an alternative reading?)
I am pleased that this will not be required for several reasons, not the least of which is that compulsory training on proposed areas such as soft skills and "the principles and fundamentals of ethics" is ridiculous, and an insult to those at the coalface of the financial services industry.
Let FAs and FAPs identify their own skills gaps and fill those through CPD. Where a gap is identified that requires training on "the principles and fundamentals of ethics", then perhaps an undergraduate philosophy paper is the answer?