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Professional bodies 'will have to push harder' on CPD

[UPDATED, ADDS DAVID IRELAND COMMENT] Under the new proposed code for financial advisers, rules around CPD credits and who can offer them are being tightened and the proposed KiwiSaver delegation has been dropped.

Friday, October 4th 2013, 6:01AM 3 Comments

by Susan Edmunds

The Code Committee has stuck with the change that requires AFAs to complete 30 hours of structured CPD over two years, instead of 10 hours each  year, remains. But it has removed the reference to that training being delivered by a DAO or professional body, and struck out the definition of both.

“It doesn’t help professional bodies promote themselves,” Financial Focus adviser Murray Weatherston said.

Structured CPD will have to be provided by a qualified educator or relevant expert, provide an opportunity for feedback and interaction, and be verifiable by documentation.

Training that is provided purely for the purpose of promoting a particular financial product will be excluded.

Committee chairman David Ireland said if professional bodies were offering good CPD programmes, it shoud not be a problem. But he said they would have to be able to justify the training they offered as structured credits, and potentially push harder.

"Simply because a professional body is delivering the training, that's not enough in itself. It doesn't get an automatic tick. There's no bar or block to them doing it."

IFA president Nigel Tate said he would be looking at the code closely over the weekend. PAA president Bruce Cortesi said he was looking at it overnight.

Other changes have gone through largely as expected, such as the simplification of code standard five, which relates to conflicts of interest. The revised code also makes clear that advisers must place the interests of clients first and act with integrity, irrespective of any other code standard.

Being a chartered accountant or CFP will no longer be a recognised alternative for having completed standard set c, and the NZX diploma will no longer be an alternative to standard set D.

The committee has also backed away from its plan to offer a pathway to non-authorised advisers to offer advice on KiwiSaver.

Instead, the code offers a provision for AFAs to advise on KiwiSaver first-home withdrawals without sitting investment qualifications.

Weatherston said the committee likely had its hands tied when it came to KiwiSaver. “It seems crazy that financial advisers who are not authorised are not able to talk to their clients about using the KiwiSaver withdrawal for part funding of a first house purchase… but that needs to be a wider legislation change. If mortgage brokers are capable of talking to someone about what mortgage they should have, it seems strange they can’t talk about taking money out of their KiwiSaver account.”

He said the committee could not solve that problem. The move away from a pathway had been clearly signalled because of huge adviser opposition to advisers who were not authorised offering full KiwiSaver investment advice, he said.

“From an initial skim read, I’d give the code committee a gold medal.”

Final comments on the draft can still be made, until October 24.

« Draft version of revised code releasedTaking professional bodies out of the equation 'a boost' »

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Comments from our readers

On 4 October 2013 at 9:49 am Ally said:
If DAOs or professional bodies will no longer be able to offer CPD, does this mean the "experts" referred to in the Code will have to award CPD credits themselves ?

Surely not: they won't have the time nor inclination to do that. Why would they bother ? As for the 30 hours-over-two years idea, we still have not been given a reason why this has jumped 50% from what is already in the Code.

I suspect it was the IFA's idea (so they could sell more CPD). Ironic then that they are now excluded from doing so.
On 4 October 2013 at 10:19 am Brent Sheather said:
Yes indeed a gold medal to the code committee and a giant step forward for our profession. Good work and thanks to David Ireland.
Regards Brent
On 7 October 2013 at 12:24 pm Steve said:
The proposed exclusion of technical product training "provided for the principal purpose of promoting a particular financial product" requires clarification, at least when one considers life, disability and medical insurance.

Does the exclusion apply in relation to "promoting" by the insurer to the adviser or the "promoting" by the adviser to the client? I can understand excluding mere "puffery" by the insurance company - but then that is not "training".

Technical product training in isolation of the reasons "why it should be recommended to a client" (I belive this is "promoting")is of very limited value. Appropriate life insurance advice is dependent precisely on the reasons (benefits/risks transferred/manner in which the policy will deal with a certain situation) why a particular product is most suitable for that particular client and should therefore be "promoted"/sold/recommended. The product “selling features” are what determine it’s relevance to a particular client. Benefits are only useful for what they can achieve relative to the client's particular circumstances. There can be very significant differences in the way policies provide protection to clients, even if they are of the same class/type.

Unless the Code Committee clarifies this and more cleary limits the exclusion only to the insurance company promotional material that does not educate the adviser, there is a real danger that the only training valued by advisers (structured) will be almost useless to the advice process and the advancement of professional ability will be significantly impaired.

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