by Susan Edmunds
It has released its response to the submissions it received on the final exposure draft of the code, which has been submitted to the Financial Markets Authority for approval.
Thirteen formal submissions were received, mostly from product providers and professional associations.
The new version of the code separates the existing code standard eight, covering suitability of advice, into two standards.
This is designed to address concerns that the existing rules were making it too difficult for advisers to offer anything less than a full financial plan for clients.
The new code standard eight requires than when providing a financial advice service to a retail client, an AFA must agree with the client the nature and scope of the service to be provided.
The new code standard nine says when providing a personalised service, an AFA must take reasonable steps to ensure that the service is suitable for the client, having regard to the agreed nature and scope of the service provided.
The committee said it had received overwhelming support for the new structure, and the principles-based approach to the suitability standard.
Submissions had confirmed its view that the new wording would help remove some of the confusion and practical difficulties in complying.
Some submitters pointed out that all advice is limited in some way, with which the committee agreed. It edited its text to make it clear that the obligation as on AFAs to ensure clients were aware of any limitation on the scope of the services that had been agreed, and the implications of that.
Other submitters were worried advice could be limited by a client withholding information but the committee said the rule would not be expected to apply in that situation.
One submitter said the prescriptive requirements of the old code standard should be retained as they were a safe harbour for advisers, a point the committee rejected,
The changes are expected to come into force by the end of the year.
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