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New code's wider scope helps advisers: Chairman

Authorised financial advisers will benefit from being part of an industry fully bound by a code of conduct, the chairman of the working group developing the new code says.

Thursday, October 19th 2017, 6:00AM

by Susan Edmunds

Angus Dale-Jones said the working group was preparing to take questions to focus groups as the next part of its consultation process.

He said it was an opportunity to bring a consensus to the way the financial advice sector worked.

At the moment, no matter how regulated and well-performing AFAs were, they could have their reputation besmirched by other, less regulated parts of the industry. The existing code only applies to AFAs.

The new code will set minimum standards of general competence, knowledge and skills across the sector; minimum standards of particular competence, knowledge and skills that will apply in respect of different types of financial advice, financial advice products, or other circumstances; minimum standards of ethical behaviour, conduct and client care; and minimum requirements of continuing training for those involved in giving financial advice.

The working group has developed some key principles that will underpin its work.

It said, while there would be retail clients who have a high degree of competence and knowledge about financial matters and products, a key element was that all retail clients should be assumed to understand significantly less than any person giving financial advice.

It was also important that every person that gives financial advice, and every retail client, could easily identify and understand what minimum standards applied to them and their advice.

The group wanted to minimise the number of different minimum standards that applied.

“It is also our desire that the code’s minimum standards should as far as possible be the same irrespective of the method of delivery of the financial advice. The code must work across the entire advice ecosystem (advisers, systems and processes) – allowing for different ways in which competence, knowledge and skill may be demonstrated – so that minimum standards apply consistently to the same type of financial advice however delivered and irrespective of whether that type of advice is provided by a one-person business or a vertically-integrated company.”

The working group has had three meetings so far and informal contact with focus groups including financial adviser associations, banks and insurers.

Dale-Jones said the code would be different in that it was a service code and not an occupational one.

It would have to apply in a range of situations from where advice was given in a brochure through to full investment planning services.

It would also have to work with basic bank term deposits or highly technical hybrid-equity investments, and for those advisers who received no remuneration from any product providers as well as those who worked solely on commission.

But Dale-Jones said, while it was complex, there would be benefits to getting it right.

"If people are able to use the financial sector in a more trusting way than currently, everyone benefits."

You can sign up for code updates here

Tags: AFA Angus Dale-Jones banks code working group conduct financial advisers regulation

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Last updated: 15 November 2017 9:40am

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