Financial Adviser Code Committee Proposals & Roadshow
- Some mortgage brokers may need to become authorised
Proposed minimum standards of competence, knowledge and skills for authorised financial advisers (AFAs) were released last week. The Securities Commission and the Code Committee also conducted a consultative roadshow in the main centres. (Yay…about time)
Colleen Dennehy and John Commins attended the consultative meeting and found it very useful – not so much for clarification of what was contained in the Code Committee proposal document, but for emphasis on how implementing and supervising the new regime might evolve.
While the proposals deal with standards for AFAs, there are implications for those who deal exclusively with consumer loans (mortgages) and / or term life and disability insurance and / or general insurance. All of these are category 2 products. Advisers who give advice on these, would not, on the face of it, need to become authorised i.e. Mortgage brokers and insurance (risk) advisers.
But, as the Code Committee and Commission Director of Supervision, Angus Dale-Jones, took particular care to point out product categories are only one limb of the criteria for whether a financial adviser needs to become authorised.
The other limb is that those who provide a financial planning service – for any category of product, will also need to become authorised. The Financial Advisers Act 2008 defines “financial planning” very broadly. In fact, most advisers who provide “needs based advice” on more than one or two financial products for a particular client will need to be very careful that they do not cross the “financial planning” line.
Angus Dale-Jones said the Commission was not going to write “black letter rules” about what constituted a financial planning service. Rather, he said the Commission would take a “collaborative approach”. He made it very clear however that non AFAs operating in the category 2 product space should pay close scrutiny to what they do and if in any doubt, should become authorised.
Professional Lending Services and Professional Investment Services are committed to keeping you informed with updates on the new rules. PLS and PIS will also be providing assistance and resources exclusively for its advisers to become fully compliant with the new regulatory regime.
