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Educating the educated - Code Standards 6, 7, 8 and 9

Yes, it is somewhat of a minefield and the further down the rabbit hole you go the less sense it makes.

Tuesday, June 8th 2021, 3:13PM

by Jon-Paul Hale

This is all about the practicalities of Continuing Professional Development (CPD) and why hours per year or some other measure isn't relevant.

In terms of the education gaps, I was under the impression this was an issue of NZCFS V1 Core+Financial Advice+Strand, which I have mentioned in a couple of previous articles, which isn't quite correct.

I had been advised of this by my training provider incorrectly on two different occasions as well. Their answer, and that of others I have dug into, is that doing the bridging paper would bring us up to NZCFS V2. This is somewhat incorrect concerning what we are required to have.

Before I get too carried away, this is where I've got to. It is my opinion, and as I have found in the last six months, things are subject to change.

Yes, this is about being in the right place for March 2023 when the education safe harbour expires, which means you need to do something about this before then, but maybe not right now today.

Let me be clear: This applies to everyone regardless of their current qualification. And this is mainly about Code Standard 9.

I sat down with Rod Seven from Professional IQ on May 10 to get the low down on what's needed here and it was very helpful. Thanks, Rod.

Under the current code of conduct, you have to have:

- National Certificate Financial Services Level 5 (NCFS)

- NZ Certificate Financial Services V1 (NZCFS V1)

- NZ Certificate Financial Services V2 (NZCFS V2)

Plus the relevant strands for your advice speciality. Right now, that covers off Code Standards 6, 7 (investments only), and 8.

So today everyone is pretty much okay if they have one of these qualifications.

Yes, those that did Core+Financial Advice still need to do their relevant strand(s) for Code Standard 8.

But wait, there's more. No, no steak knives, they're dangerous. Yes, if you're bored already, you need to keep going further down, that bit is important too.

The issue is Code Standard 9

Even if you have NZCFS V2, you need to do something to address the requirements for Code Standard 9 for March 2023.

To cover off Code Standard 9 today, you need to do one of the three following things:

- Have NZCFS L5 V2

- From NZCFS L5 V1, do the legislative framework course. NZQA Standard 31858 (this makes V1 V2). Standard 31855 is in there but not as critical.

- From NCFS, do the legislative framework course. NZQA Standard 31858. This covers off Code Standard 9 but doesn't upgrade your qualification.

This isn't going to remain current for you once the coming changes with the Conduct of Financial Institutions (COFI) legislation gets passed later this year.

Code Standard 9 requires you to maintain competence in the legislative framework. When the legislative framework changes, you need to update it. As well as the other relevant bits for you.

CoFI is mainly being applied to financial institutions but will become an issue for us advisers in how we operate and how our agency agreements are managed. So no, you can't ignore this one either.

Now for the predictions.

With my time with the adviser panel for the Code Working Group (CWG), we need to heed a couple of clear messages and a couple of insinuations that can be drawn.

First, KiwiSaver:

- If you do KiwiSaver work, this will not be carved out as a separate thing to investments; it's been said elsewhere. I'll reiterate it.

- Also, under FSLAA switching KiwiSaver funds with the same provider now triggers Full Financial Advice. As in, you have to have a compliant process under your FAP to advise on KiwiSaver.

- This leads to investments and financial planning. The code with Code Standard 7 separates this from the rest in Code Standard 8. The CWG can revise the education required to be moved to Level 7 from the present Level 5 without disrupting the rest.

Yes, if you are a risk adviser that has been doing class advice on KiwiSaver, you need to be thinking about your long term position on this.

It will not be "do your investment strand", and you're okay for KiwiSaver.

That is as it stands currently, and it doesn't preclude a change of mind in the future for KiwiSaver. However, there has been no indication that the view has softened. The comments from the CWG in this area have been pretty firm in their delivery.

The timeline:

Sometime between March 2023 and June 2024, I'm expecting the CWG to come out and announce a 2-3 year window that lifts Code Standard 7 to Level 7.

At the same time, I expect that we will see the safe harbour/grandfathering approach for being a prior AFA or NCFS in Code Standards 6 and 8 removed, with a 2-3 year time frame.

So those that were an AFA and didn't have NCFS need to start getting their NZCFS V2 completed, and if you are doing investment work, you need to be thinking about Level 7 as well.

Many in this camp will be older and later in their careers if we still have any at all. They are likely to be retired by the time the Level 7 requirement hits. If not, get on to it.

Also, a similar story if you have NCFS and plan to stay for a long time and not just a good time.

You need to consider upgrading to NZCFS V1 (paper to paper, as in Core to Core and Strand to Strand)

And then add 31858 to the mix to upgrade to NZCFS V2 with regulatory framework covered. (Likely going to be referred to as The Bridging Course)

For some, with NCFS redoing NZCFS V2 is going to be the more cost-effective and time-efficient approach. Yes, it is redoing the qualification, but pragmatically this will be the requirements.

I have both the Aussie quals and the NZCFS V1; yes, I've already done it twice. It was painful. But there was no guarantee that the Aussie qual, which wasn't recognised here until March 16, 2021, was going to be accepted going forward when I did my NZCFS V1 in 2018.

So what's the plan?

If you have V2 already or do the 31858 education standard today, you still have a gap for Code Standard 9. That is the line for having your education competency is in March 2023, not today.

- This means that until COFI is completed, doing it now will have a gap that still needs to be covered. We have a couple of other pieces of legislation in progress.

- So, if you are going to do the 31858 paper, the smart approach is to leave it until 2022 and then keep it current with CPD.

Yes, this is a bit more of a nightmare than I anticipated.

And don't forget to maintain your product accreditations with your providers; this is a direct requirement of Code Standards 7 and 8. It is reinforced in Code Standard 9.

This is the final nail in the coffin of required CPD hours, as the training and development you do are directly related to the changes from your providers and the necessary updates to maintain their accreditation too.

However, to avoid all of this:

Suppose you have any of these qualifications. You can demonstrate competency with the code, especially the legislative framework, through continuing CPD (which RFA's have been pretty slack about).

In that case, you can skip the additional papers and courses...

Yes, good luck with that one... Yes, you're going to be hard-pressed to cover this with CPD from the older versions of the qualifications too.

I think that's the bottom of the rabbit hole on this for the moment, although I'm sure a few shovels are being sharpened out there to dig it deeper.

Tags: Jon-Paul Hale Opinion

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Last updated: 11 August 2022 8:40am

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