Industry asks: Is transactional advice relief working?

Fifteen formal submissions have been made to the review of the Code of Professional Conduct for AFAs' minimum standards of competency, knowledge and skill.

Monday, December 7th 2015, 6:00AM

by Susan Edmunds

The Code Committee has been consulting on proposed tweaks.

The code governs how AFAs operate their businesses, covering qualifications, conflicts of interest, CPD and advice suitability.

The Financial Advisers Act review, which is also under way, may result in significant changes to the code, and could mean it is scrapped entirely.

But Code Committee chairman David Ireland previously said it was important to make sure it remained relevant and could meet its objectives, despite that possible upheaval.

The proposed changes consulted on focused on the competency requirements, recognising the new Level 5 certificate, which is the minimum standard for AFAs.

It will be set as the default and the code's alternative qualification scheme will recognise the old qualification for a period so that those advisers currently going through that qualification have time to complete it.

The code also needed to be updated to address changes as a result of the Financial Markets Conduct Act coming into effect.

As well as answering questions about those aspects of the code, submitters were able to give feedback on any other part they wanted to.

Ireland said the Code Committee received 18 submissions, 15 of which were formal.

“Given the very limited scope of the Code review and the extent of other regulatory activity going on at present, we weren't sure what to expect in terms of volume of responses. More would have been good, but in the context 15 is a good number and what we did receive were very helpful in relaying different perspectives on our proposals,” he said.

He said as well as the competency considerations, there was significant interest from submitters in code standard eight, and the efficacy of the new transactional advice relief.

This enables an AFA to provide personalised services without needing to determine suitability, to the extent provided for in the client’s instruction.

"Continuing concerns were expressed  on both the FAA's impact on accessibility of advice and FMA's guidance note on limited advice. We will be taking up the points raised with FMA.  We were particularly pleased with the level of engagement by tertiary providers and their constructive approach in helping to hone our thinking around alternative qualifications. They have given us a lot to think about."

Tags: Code Committee financial advisers Financial Advisers Act

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