Code committee chairman, and lawyer, David Ireland told delegates at the PAA conference in Auckland that work is already underway on updating the code.
He describes the changes as “tweaks” however there are some significant issues.
One area of concern is around professional development requirements.
Ireland says there is some confusion, or lack of clarity, around what advisers need to do.
Another issue that the committee has identified is the shortage of Authorised Financial Advisers.
There are still less than 2000 AFAs and this is insufficient to service New Zealand investors, he says.
Ireland described the shortage as being a “huge concern” and the committee needs to look at options to “plug the gap”.
“There are some intermediate steps we can take with the code.”
He says the committee wants to make “enhancements rather than chucking it (the code) out and starting again.”
“It’s about how we can get a better outcome for NZ Inc.”
A consultation document will be prepared but this won’t be done until the Financial Markets Conduct Bill is passed into law.
Ireland says the bill creates a lot of changes for the code.
The Code Committee has to consult with advisers and then make its recommendations to the Financial Markets Authority.
He says the FMA’s role is to make sure that the committee has properly consulted with advisers.
If it agrees the changes are sent to the Minister of Commerce for approval. Changes would be made to regulations through an Order in Council.
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Structured CPD needs to be expanded so that anyone can do anything which in their opinion improves the way they do their job. This would mean the onus is on the adviser to justify CPD once the FMA visits and for advisers who genuinely want to improve the standard of investment advice rather than increase profitability that they would be free to do so rather than been constrained as they currently are.
Now let the comments roll in …