Code of Conduct approved

Financial Regulation Update – May 2019

The Code of Professional Conduct for Financial Advice Services (Code) was approved by the Minister of Commerce and Consumer Affairs today. The Code applies to regulated financial advice given to retail clients under the Financial Markets Conduct Act 2013 (as amended by the Financial Services Legislation Amendment Act 2019).

The standards in the Code are separated into two categories:

• Ethical behaviour, conduct and client care: These standards require a person giving financial advice to treat clients fairly, act with integrity, give financial advice that is suitable, ensure that the client understands the financial advice and protect client information.
• Competence, knowledge and skill:
  • A general standard of general competence, knowledge, and skill applies to a person that gives financial advice. This is demonstrated if the person holds the New Zealand Certificate in Financial Services (Level 5) or if the person was an authorised financial adviser immediately before the commencement of the Code (among other means). 
  • A person that designs an investment plan or who provides product advice relating to acquiring or disposing a financial advice product or switching funds within a managed investment scheme is required to meet the standards of particular competence, knowledge and skill.
  • A person who gives financial advice must keep their competence, knowledge and skill up to date by undertaking continuing professional development.

The standards relating to ethical behaviour, conduct and client care are expected to come into force with the commencement of the Financial Services Legislation Amendment Act, which will be in nine months’ time (at the earliest). In relation to the standards relating to competence, knowledge and skill, advisers may benefit from a two year safe harbour period if they were allowed to provide such advice before the new regime came into effect.

The Code is available here. For more information, please contact us.

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.