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Revealed: How much it cost to develop the Code

The original budget to write a new Code of Conduct for financial advisers was $150,000, but the total cost so far is more than three times that amount; and the job is still not finished.

Wednesday, May 1st 2019, 6:00AM 5 Comments

In response to an Official Information Act request, the Ministry of Business, Innovation and Employment said the Code Working Group, tasked with delivering the code, had so far cost $506,946,94.

That included fees for those in the group, travel to meetings and roadshows, the webinar and associated services, room hire, and consulting fees for legal advice and a plain English drafter.

The group has conducted a focus group, consumer survey and two formal consultation rounds.

“The group was funded from MBIE’s baseline, therefore there was no formal budget identified for the development of the new code of conduct. However, in January 2017, prior to the appointment of the Group, officials at MBIE estimated a cost of $150,000 for member fees only,” said Sharon Corbett, manager of financial markets policy building, resources and markets.

“This was a very early estimate before the appointment process was completed and was based on there being fewer members [seven] taking less time [10 months] to deliver a draft code. As above, the initial estimate only covered members fees and not the other items detailed above.

“There has been considerable interest in the consultations the group ran and the group considered a significant volume of submissions which added to the time taken to develop the code.

“These processes often take longer than initially anticipated and it has been important to ensure the group had sufficient time to get the code right. The draft code of conduct is currently with the Minister of Commerce and Consumer Affairs who is considering it.”

It had been expected that the code would be finalised in the first quarter of this year but that has not yet happened. The proposed Code is with the Minister of Commerce Kris Faafoi, who has yet to approve it.

The code is being developed to sit alongside the new Financial Services Legislation Amendment Act.

It will apply to all advisers offering personalised advice. It includes requirements for qualifications as well as ethical and client-handling considerations.

Tags: Code Working Group FSLAB

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Comments from our readers

On 1 May 2019 at 10:55 am Pragmatic said:
As mentioned in many previous comments, the composition, cost, and number of these working groups is an extraordinary waste of money and time.

In fact - I actually heard a member of the tax working group present in Nov 18 where he clearly stated that it was unlikely that many of the TWG's proposals would ever be accepted (noting the restrictiveness of their terms of reference).

I can only assume that these working groups are the brainchild of a political party that was devoid of ideas ahead of their unexpected election.
On 1 May 2019 at 1:43 pm Murray Weatherston said:
@pragmatic
While I have great sympathy towards your view of the plethora of working groups, your slings and arrows in respect of the CWG are misdirected.

CWG was announced on 21 June 2017 by then National minister Jacquie Dean.

CWG has been on the job for 21 months to date. That seems very slow. I think I might need to apologise to FSC because when they announced it had taken them 12 months to develop their Code, I said "what took them so long". Relatively they were cheetahs.

As an aside, it was interesting that when i went to official websites to confirm my recollection, all evidence of pronouncements under the previous government was missing.

Is it a case of "The King is dead. remove all evidence of him. Long live the King."

Interestingly today is day 61 since the Minister received the Code from CWG. I can now confidently predict that unless FMA has objections that means it needs to be sent back by the Minister to CWG, the Code will be published in the next 29 days.

If it turns out they haven't raised any objections, i might once again ask "how come it has taken so long to publish?"
On 1 May 2019 at 2:07 pm gavin austin adviser business compliance said:
I'm sure that provisional licensing opens 3 mths after the code is approved. That being the case it's probably that FMA aren't going to have the application process ready and have asked for more time. Ut should be of no surprise given that the history of this whole process had been slower than a snails pace.
On 1 May 2019 at 4:33 pm Murray Weatherston said:
OK I can't count - today is actually day 62. My prediction still remains.....
On 7 May 2019 at 9:30 am Compliance Guy said:
It seems simple to me as to why it cost so much. The CWG started with a blank piece of paper. They thought long and hard about anything and everything that could be part of the code. Including books they read over the Christmas period on ethics. This resulted in a huge amount of feedback, simply because their ideas, dreams and aspirations was not remotely in touch with reality. Then they went back to the drawing board. Looked at the current AFA code, ripped the title page off, made some minor tweaks here and there. Now we have before the Minister what I could have done myself in a fraction of the time.

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Last updated: 23 May 2019 12:07pm

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