Draft Code Adds Momentum to Regulation

Draft Code Adds Momentum to Financial Adviser Regulation

The release today for public consultation of the draft Code of Professional Conduct is a significant step towards having the financial adviser regime in place, according to David Mayhew, the Commissioner for Financial Advisers. The Code specifies the minimum standards of professionalism that investors can expect of their financial advisers including competence, knowledge and skills, client care, ethical behaviour and continuing professional training.

The Commissioner expects to receive the final draft Code prepared by the Code Committee in June for his approval and subsequent recommendation to the Minister of Commerce.

“Completing the Code is critical to the regime as it will stipulate the requirements for advisers to be authorised,” Mr Mayhew says. “The draft Code is the best indication of what the final requirements are likely to be, so advisers who are a long way off that mark should take remedial steps immediately. Failure to do so means risking having their business shut down when the regime commences,” he warns.

Mr Mayhew says the Commission understands that advisers who have to be authorised – those providing a financial planning service or advice on more complex products – need sufficient time to have their competence assessed and undertake training if required. But he emphasises, “While the Commission will monitor the demand for adviser training and assessment resources, we expect advisers to act now to meet their competence requirements”. From mid-April advisers will be able to book with ETITO, the training organization, to have their competence assessed to ensure they meet the minimum standards proposed in the draft Code.

“Release of the draft Code will also assist businesses that employ financial advisers to decide whether they have the capacity to be qualifying financial entities (QFEs),” Mr Mayhew says. “QFEs are eligible for streamlined regulatory arrangements but must ensure their advisers operate professionally by reference to standards equivalent to those contained in the draft Code.”

Mr Mayhew says the draft Code is a significant milestone on the road to lifting the professionalism of the financial adviser industry and notes that the Code Committee has done a huge amount of work in getting it to this stage.

He adds, “The Code will impose professional demands which will be new to many advisers and will impact directly on their business practices”.

“As this is the final opportunity to participate in the development of the Code, I strongly urge the adviser industry to get involved and provide comment.”

The adviser industry has until 7 May to provide feedback on the draft Code.

ENDS

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