Advisers unaware of care, diligence, skill
Strategi has issued a white paper on care, diligence and skill. The Financial Advisers Act (FAA) requires that every adviser “exercises the care, diligence and skill that a reasonable financial adviser would exercise in the same circumstances”.
But Strategi’s managing director, David Greenslade, said many advisers, especially RFAs, were not aware of what the standard was that they were required to meet.
Even AFAs could be caught out if they had not kept up with changing regulations, the new version of the Code of Professional Conduct for AFAs, and FMA guidance notes, he said. "These concepts are not static. Consumer expectations are constantly rising and this causes legislators and regulators to reacts. New laws and regulations come into play, the Code gets updated and FMA issues additional guidance notes. Add to this outcomes from dispute resolution service determinations, court judgements... what this means is that the expectations around interpretations of the words care, diligence and skill, and how they are now applied ... are potentially different to what they were when the FAA was drafted in 2008."
It could come as a shock to some advisers if they were held to account, he said.
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