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Financial Markets Authority AFA Update: Issue # 23

Page last updated: 28 Mar 2014

Revised Code of Professional Conduct formally approved by Minister

Yesterday the Minister of Commerce, Craig Foss, issued a media release announcing the revised Code of Professional Conduct for Authorised Financial Advisers (AFAs) (Code), which will come into force on 1 May 2014.

What this means for AFAs

FMA will be communicating the key changes over the coming weeks and sending revised Code booklets to all AFAs. It is important that all AFAs familiarise themselves with the new Code. Changes to the Code centre around the Code standards relating to ethical behaviour, client care, competence, knowledge and skills, and continuing professional training.

Summary of key changes:

  • The minimum standards of client care have been revised to provide more clarification about what is required at each stage of the advice process and include:
  • Clarifying that Code Standard 1 is paramount - to place the interests of the client first and act with integrity.
  • A provision enabling AFAs to advise on KiwiSaver first home withdrawals without having attained Unit Standard Set D (provided the AFA satisfies Code Standard 14).
  • Providing greater flexibility for AFAs and their professional training by broadening the definition of structured professional development, spreading the professional development hours over two years and increasing the number of structured hours AFAs are required to undertake from 20 to 30 hours.
  • A new Code Standard for managing conflicts of interest. (Code Standard 5).

We have also recently published guidance on how Discretionary Investment Management Services (DIMS) will be regulated after 1 December 2014. Please read our guidance here.

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