Independent definition a problem for advisers

Several people questioned the Code Committee's proposal for the default position of Authorised Financial Advisers to be "independent" at its Wellington forum on the ethical behaviour and client care discussion document, calling it unworkable as all advisers favour and know some products over others.

"What independence suggests is that we're all dodgy," said Institute of Financial Advisers past-President Bernard Gresham. "No-one has ever questioned that I take commissions."

Committee member David Ireland pointed out that it is a simple case for advisers to communicate their relationships with providers to clients, and said the committee has "shied away" from an overly prescriptive regime. Still, he accepted there could be problems in the public's interpretation of what an independent adviser was and urged advisers to make submissions on the document.

Much of the Code Committee's proposals on client care had been taken from the IFA's own code, along with the Institute of Chartered Accountants and standards in Australia and England, Ireland said.