What’s Changed in the Financial Advice Code?
Russell Hutchinson takes a deep dive into the recent changes to the Code of Conduct for financial advisers and highlights the significant changes.
Wednesday, September 3rd 2025, 6:00AM 
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by Russell Hutchinson
The new version of the Code of Professional Conduct for Financial Advice Services has been signed off and will take effect from November 1. At first glance, not much has changed.
The nine standards remain, and most advisers will find the framework recognisable. But a closer look shows a significant clarification and one significant shift.
Four of the nine standards have been altered. That’s nearly half the Code, although most of the changes are technical. Standards 6, 7, and 8 (general competence, investment planning, and product advice) have all been updated to recognise version 3 of the New Zealand Certificate in Financial Services (Level 5), alongside version 2.
Standard 7 also loses its “interim” label. The suggestion that investment planning competence might need to be raised further has been dropped. The effect is to settle the current level of qualification as the accepted benchmark.
Commentaries on six standards have been revised. Code Standard 3, which is the requirement to give financial advice that is suitable, now has the longest commentary of any standards. That’s because suitability is, I think, the heart of financial advice.
Now we see specific guidance that states:
“In some advice situations, ensuring that the financial advice is suitable for the client may require the person to have competence, knowledge, and skill in addition to the minimum standards specified in Part 2 of the Code. The additional competence, knowledge, and skill required depends on the circumstances. For example, it may be knowledge in a specialised discipline such as in relation to a specific asset, legacy product, or foreign regulatory regime, or skills reasonably necessary to understand the client’s circumstances.”
This is significant because it highlights requirements above the minimum standard, specifically identifies legacy product knowledge – an area of advice the Financial Markets Authority has been interested in recently – and even nods towards the need for soft skills.
To cap it off, it links to Code Standard 9, where we see the largest change in the whole Code.
Standard 9, covering continuing professional development.
This has been substantially reframed. Where the old Code talked about keeping “up to date,” the new Code stresses continual development.
The commentary expands on this with examples ranging from formal mentoring and structured courses to seminars, industry activity, and even self-directed learning. Entities are expected to review systems and expertise each year, not just maintain the status quo.
Word for word, only about 11% of the commentary text has changed. But impact is not measured in word counts. The CPD rewrite shifts the emphasis from compliance to growth, from box-ticking to ongoing learning.
Advisers and providers will need to think about how their training programmes reflect this broader view.
I have seen some advisers talk about education providers as not being necessary: the line is that you can gain all the CPD you ‘need’ by merely going to product provider training.
If your advice is all focused on which product to have, then provider training might be fine. On the other hand, if you consider wider financial strategies, like how much to self-insure, or trade-offs between different cover types, you rarely find insurers talking about these in their training.
Go even broader to trade-offs between different financial goals (protection versus debt repayment versus achieving a life goal) and I think lots of value can be had by working with other financial advisers who have experience working through these issues with clients.
Our assessment
The overall impact is moderate. Most obligations are unchanged, but the new framing of CPD is significant. Firms should review how they document and support learning, making sure development is continuous rather than static.
Disclosure: I own half of a training business, and I am a member of two professional associations which provide training too.
| Standard or section | Changed | Changed Nature of Change | Commentary Change |
| INTRODUCTION | Yes | Minor (references the requirement for minimum standard) | N/a |
| 1. Treat clients fairly | No | None | No |
| 2. Act with integrity | No | None | No |
| 3. Give suitable advice | No | Major (gives examples of what types of knowledge may be required) | Yes- significant updat |
| 4. Ensure client understands advice | No | None | No |
| 5. Protect client information | No | Minor (updated legislation referenced) | Yes |
| 6. General competence, knowledge, and skill | Yes | Minor (qualifications updated) | Minor wording |
| 7. Investment plan competence | Yes | Moderate (qualifications updated, interim note deleted) | Minor wording |
| 8. Product advice competence | Yes | Minor (qualifications updated) | Minor wording |
| 9. Continuing professional development | Yes | Major (substantive rewrite, reframed obligations) | Significant rewrite |
| « Do longer SOAs break the law? | Growth in FAPs and FAs sustained over the last 18 months » |
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Comments from our readers
Of course there are very knowledgeable BDM's out there, some of whom I spent a little time with last week, but the feedback I get from advisers is that generally, other than basic training for new advisers, adviser training on advice related matters outside the insurer's direct area of expertise (product/underwriting/policy administration and claims) is scarce.
Independent education providers, providing suitable training on all these 'non-core' insurer advice issues, seem to me to be a valuable resource for FAPs who now appear confirmed to be responsible for ensuring their advisers are adequately competent.
and one person in the working group i had a conversation with recently, even suggested advisers should stick strictly to their practice, ie. a tunnel vision approach rather than comprehensive approach. how does that benefit the consumers, i wondered?
“If your advice is all focused on which product to have, then provider training might be fine.”
Thanks Russell. Great to read your deep dive here on these small changes made to the Code of Conduct for financial advisers. So at least as far as the mortgage adviser industry is concerned advisers do not need to be paying money to a dealer group, education provider, or professional association for CPD.
The new Code still doesn’t prescribe the CPD required so logically as an adviser the CPD that you would be focusing your time on is product knowledge of the various providers that you deal with. Everything else is secondary to your role as an adviser. When discussing the subject of continuing professional development as an adviser product knowledge is paramount when providing advice. The good news is that the lenders do a good job nowadays of letting advisers know regularly about the changes and enhancements that they make to their policy and products, and this information is being communicated to accredited advisers regularly for FREE. Evidencing to a regulator like the FMA that you are abreast of these announcements made by the providers as they happen can be easily shown in a register.
I can't think of a better or more appropriate way to demonstrate ongoing professional development i.e. ongoing learning as an adviser and it’s costing you nothing but time.
Obviously if a mortgage adviser has elected to work under a dealer group's FAP licence instead of having their own FAP then they are likely to be paying unnecessary costs in respect to CPD.
My concern is not so much for those willfully avoiding exploring these issues but more for the many who believe they are doing a great job and simply don’t know where their advice may be deficient. Neither are doing their clients any favours, and are likely exposing themselves and their FAPs to completely avoidable censure or costly complaints.
I get more development from other advisers' experience than from any canned CPD program. Experience in the real world is often the best teacher; once you've achieved the general academic requirements or additional formal learning (CFP/CLU), if you feel the need to go there.
My key challenge with the CPD plan thing is that I struggle to identify weak areas that need assistance, because I generally don't know about them until I encounter them, and then I address the necessary learning. As I suspect most advisers who have been around for more than 5 years do.
Revisiting existing knowledge to identify change is one of my primary CPD objectives.
For example, outside of product changes:
- Annual review of ACC provisions and response levels.
- Tax rate changes as they happen
- WINZ benefits and super rates
- Company and regulatory requirement changes
- Health care provisions and performance
- Annual earnings reporting
- Risk rates and trends
- New medicines to market
And many, many more.
Most advisers in their daily work are probably covering some level of CPD as they investigate things for clients, which they're probably not accounting for.
here's an example of a "tunnel vision" approach - mortgage adviser refinance property for client, get all the financials in order, loan approved.
and the "comprehensive approach" - get the financials, and note a change in ownership / title of the property when refinancing, ask client how long he/she has owned the property, then suggest to client to seek legal / tax advice, before refinancing.
as mentioned in my earlier comment, the person at the working group suggested to stay out of tax issues. i'll give two examples why i disagree with this person. most unfortunately, people with no experience in an advisory role are telling advisers what they should be learning and doing. i think version 4 may not be too far away.
1) i had a prospect who refinanced and got hit with a tax bill, came to me for advice. i told her the reasons why she was hit, and how come her mortgage broker didn't asked those questions? got a blank stare. did her mortgage broker do anything wrong by not asking (NOT advising) a legal and tax question?
2) a retiree told me he transferred his investment property to a trust, and ird clawback some of the taxes. i knew why, and told him the reason and told him that i would have referred him to his accountant. he said he didn't know.
I’m not saying life advisers who are not tax experts should give tax advice, not at all, but I believe Life advisers would be expected to understand, and explain, the generally accepted tax rules around products they recommend. If they don’t, how are clients able to make informed decisions around accepting the adviser’s advice and recommendations?
The Code now requires continual professional development, not just maintaining the status quo. Tax consequences of life insurance products might be a good place to start.
i treat personal finance no different from medical practice. using medical practice as an example, why some patients who require, say, hip replacement surgery, can't have it done. it could be because he may have a heart condition which may post a threat to his life if the surgery were to go ahead. therefore, if the orthopedic surgeon have to know the patient's full medical history, including those outside his area of expertise. if going strictly by the rule as interpreted by the person in working group, the orthopedic will go have to go ahead with the surgery.
steve, happy to connect, if you would like to.
in the financial sector, advisers go straight into being a specialist without needing to know / understand the other areas of personal finance, ie. left hand does not know or cannot know what the right hand is doing. there are no general practitioners, this is a real issue that needs to be address.
Financial planning and advice are, at the core, based around personal preferences. Until such time as there is only one defined 'correct' method of deriving and delivering financial advice, those sorts of comparisons will continue to be nothing more than dog whistles.
The original, very flawed, plan for regulation was: a client goes to a financial planner for a plan, and from there, the financial planner then refers clients to the various specialists needed.
Clearly, this isn't how the real world works, where clients approach the specialties and then connect from there.
More connectivity between specialist advisers is what is needed. F&G, Life, Health, Mortgage, and KiwiSaver are the initial contact points for the majority of clients.
* Part of the strategy is to then have these advisers understand and identify the cross-referral opportunities and build their business networks while building their client bases and businesses.
Financial planning relative to these entry points is in the stratosphere for the majority of clients, but that's not to say clients won't develop a need for financial planning advice if nurtured appropriately.
More clients would engage in financial planning if there were good support across disciplines and reinforcement of having a more formal financial plan.
From my time across the industry, the average client has poor goal setting and future planning, with most looking to pay for the house and family, with an idea that retirement is way off in the future and will be dealt with later. This is the Kiwi way!
We have some responsibility to change this. Part of the problem is that the typical adviser isn't so good at this themselves. This will need adviser education, and likely regulatory expectations and guidelines to have any meaningful impact. A bit like KiwiSaver with retirement saving, gotta start somewhere and build from there.
We know schools and even tertiary education aren't the place to provide this knowledge, as the kids are not in the right mindset to take on this "old people's stuff", which leaves our industry in the position of having to cover it if it is to change.
Again, are we salespeople or advisers? Are we selling widgets, or are we a real profession?
Some hard conversations need to be had, as well as a serious look in the mirror about what we do and how we do it.
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Insurance staff are usually fine for training advisers on their product, but they are not typically advisers.
Advice issues/risk management/ financial calculations and assessment/advice strategies/competing product offering/value of options, business insurance and interpreting business risk/ annual accounts etc. are often not their area of expertise.
Neither are, basics of: Estates and Estate administration; insurance and other laws; contract law principles; business structures; ownership types; blended families and relationship property issues; Trusts, trust administration and trust policy ownership; Life insurance income tax and GST issues; Government benefits; ACC and its products; and any number of other issues that advisers need sufficient understanding of to give suitable advice.