Proposed Changes to Financial Advice Standards

Highlights:

• Emphasis on Professional Development: The proposed changes stress the importance of continuous professional development to ensure the quality and availability of financial advice in New Zealand.
• Diverse Learning Options: Financial advisers can enhance their competence through various learning activities, including additional qualifications, formal courses, mentoring, and on-the-job experience.
• Recognition of New Qualifications: The amendments will formally recognize the latest version of the New Zealand Certificate in Financial Services (Level 5), maintaining high standards for investment planning competence.

The Financial Advice Code Committee is set to introduce significant changes to the standards of competence, knowledge, and skill within the Financial Advice Code. These modifications aim to ensure that financial advisers in New Zealand are well-equipped to provide high-quality advice.

Strengthening Professional Development

The Financial Advice Code, a crucial component of the Financial Markets Conduct Act regulatory framework, dictates the conduct standards for all financial advisers. Angus Dale-Jones, Chair of the Code Committee, emphasized the importance of these standards: “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 highlight the necessity for continuous professional development. Dale-Jones stated, “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.”

Diverse Learning Opportunities

To build and maintain their competence, financial advisers have a variety of learning and development activities at their disposal. These include obtaining additional qualifications, participating in formal courses, engaging in informal and self-directed learning, receiving formal mentoring or coaching, and gaining practical, on-the-job experience.

Dale-Jones noted, “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.”

Recognizing New Qualifications

Additionally, the Committee’s consultation document proposes amendments to formally recognize the recently approved version 3 of the New Zealand Certificate in Financial Services (Level 5). This update will retain the Level 5 Certificate qualification outcomes for Code Standard 7, which sets the minimum standard for investment planning competence.

These proposed changes underscore a commitment to maintaining high standards in the financial advice industry, ensuring that advisers are not only competent but also continually improving their knowledge and skills. The aim is to enhance the quality of financial advice available to all New Zealanders.

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