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New Zealand Securities Commission |
Last Updated: 16 November 2014
Code of Professional Conduct
FOR AUTHORISED FINANCIAL ADVISERS
Contents 3
A BACKGROUND
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4
|
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B INTRODUCTION
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5
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C MINIMUM STANDARDS OF ETHICAL BEHAVIOUR
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6
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Standard 1
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Placing client interests first and acting with integrity
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7
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Standard 2
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Not bringing the financial advisory industry into disrepute
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7
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Standard 3
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Using the term “independent”
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8
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Standard 4
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Borrowing from or lending to a client
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9
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Standard 5
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Restrictions that apply where AFA is related person of product
provider
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9
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D MINIMUM STANDARDS OF CLIENT CARE 11
Standard 6 Behaving professionally 12
Standard 7 Ensuring retail clients are able to make informed decisions 13
Standard 8 Suitability of personalised services for retail clients 13
Standard 9 Explaining the basis of personalised services 14 for retail clients
Standard 10 Providing class services for retail clients 15
Standard 11 Complaints processes 15
Standard 12 Keeping information about personalised services 16 for retail clients
Standard 13 Record retention 17
The Code of Professional Conduct for Authorised Financial Advisers was approved by the Minister of Commerce under section 92 of the Financial Advisers Act 2008 on 21 September 2010. The Code was published in the Gazette by the Commissioner for Financial Advisers on 28 October 2010.
It comes into force on 1 December 2010.
Securities Commission
Level 8, Unisys House
56 The Terrace
P O Box 1179
Wellington 6011
New Zealand
www.seccom.govt.nz
November 2010
ISBN 978-0-478-36515-3 (print) ISBN 978-0-478-36516-0 (pdf)
E MINIMUM STANDARDS OF COMPETENCE, KNOWLEDGE, AND SKILLS 18
Standard 14 Overarching competence requirement 19
Standard 15 Requirement to have an adequate knowledge 19 of Code, Act, and laws
Standard 16 National Certificate in Financial Services (Financial Advice)
20 (Level 5) requirement and alternative qualifications
F MINIMUM STANDARDS FOR CONTINUING PROFESSIONAL TRAINING 22
Standard 17 Professional development plan requirement 23
Standard 18 Undertaking continuing professional training 23
G COMPETENCE ALTERNATIVES SCHEDULE 25
H DEFINITIONS SCHEDULE 30
4 A Background
This is the Code of Professional Conduct for Authorised Financial Advisers
for the purposes of the Financial Advisers Act 2008.
This section of the Code provides a brief overview of the scope and
aims of the Code. The remainder of the Code contains the operative
provisions which must be complied with by all Authorised Financial
Advisers.
Financial advisers are required to be authorised under the Financial
Advisers Act in order to provide a personalised service to a retail
client that is:
(a) financial advice or a discretionary investment management
service in relation to a category 1 product; or
(b) an investment planning service.
Financial advisers may also elect to become authorised under the
Act in other situations specified in regulations made under the
Act. As at the date of this Code no such regulations have been
made.
The overarching purpose of the Financial Advisers Act is “to promote
the sound and efficient delivery of financial adviser and
broking services, and
to encourage public confidence in the professionalism and integrity of financial
advisers and brokers”.
One of the key ways the Act seeks to achieve its purposes in relation to financial adviser services is by requiring all Authorised Financial Advisers (also referred to as AFAs) to comply with a code which provides for minimum standards of professional conduct. The overarching purpose of the Act provides the spirit underpinning the Code. When considering their conduct and disclosure obligations under the Act
and the Code, AFAs should have that spirit in mind.
The Act requires the Code to contain minimum standards of competence, knowledge, and skills, of ethical behaviour, and of client care. The Code is also required to
provide for continuing professional training for Authorised Financial
Advisers, including specifying requirements that an AFA must meet for
the purpose of continuing professional training. AFAs may be disciplined
for breaches of the Code.
A number of the Code Standards include reference to legal obligations that
would apply to AFAs irrespective of the Code requirements. Such
references are included largely for the sake of completeness. However, the
Code does not refer to all legal obligations of AFAs. AFAs
must comply with all applicable laws, whether or not referred to in the
Code.
This Code has been approved by the Minister under the Financial Advisers Act and comes into force, either in part or in full, on a date or dates specified by Gazette notice under section 94 of the Act. The Commissioner may specify different dates for the commencement of different provisions of this Code.
B Introduction 5
Each standard in this
Code consists of an overarching principle identified as a Code Standard
together with additional provisions that contain further detail
about the
application of the Code Standard.
Unless otherwise stated, the
additional provisions do not limit the application of the overarching principle
under which they are
stated, or the application of any other Code Standard. AFAs
must apply the Code Standards in a way that encourages public
confidence in the professionalism and integrity of financial
advisers.
Terms used in this Code that appear in italics are
defined in the
definitions schedule.
This Code does not limit an
AFA’s legal obligations, including those under the
Act.
Minimum standards of ethical behaviour
C Minimum standards 7
of ethical behaviour
CODE STANDARD 1
An Authorised Financial Adviser must place the interests of the
client first, and must act with integrity.
This Code
Standard applies to any activity of an AFA that relates to the
AFA’s
financial adviser services.
What is required to place a
client’s interests first for the purposes of this Code Standard is
determined by what is reasonable in the circumstances, including any regulatory
obligations binding on the AFA in addition to the Code.
An
AFA is required to advise a client only in relation to
financial products or matters that are within the scope of the
AFA’s financial adviser services, as advised to the client in
writing. An AFA is not required to consider or provide financial
adviser services in relation to financial products or matters that
are not within that scope in order to comply with this Code Standard.
An AFA’s obligation under this Code Standard to place a
client’s interests first will not be breached by reporting to the
Securities Commission any breaches of the Act that the AFA
reasonably believes to have occurred.
CODE STANDARD 2
An Authorised Financial Adviser must not do anything or make an
omission that would or would be likely to bring the financial advisory industry
into disrepute.
CODE STANDARD 1
Pg 7 Placing client interests first and acting with integrity
CODE STANDARD 2
Pg 7 Not bringing the financial advisory industry into disrepute
CODE STANDARD 3
Pg 8 Using the term “independent”
CODE STANDARD 4
Pg 9 Borrowing from or lending to a client
CODE STANDARD 5
Pg 9 Restrictions that apply where AFA is related person of product provider
This Code Standard prohibits an AFA from conduct that would
undermine public confidence in the professionalism or integrity of the financial
advisory industry. However,
this Code Standard does not prevent an AFA
from commenting in good faith on the business, actions, or inactions of any
person (including any other financial adviser, financial adviser
group, financial
service provider or industry body) or from exercising the
AFA’s reporting powers under section 45A of the Act.
8
CODE STANDARD 3
An Authorised Financial Adviser must not state or imply that the Authorised Financial Adviser is independent, or that any financial adviser services provided are independent, if a reasonable person in the position of a client would consider that the Authorised Financial Adviser or the services provided are not independent.
An AFA must not state or imply that a researcher or other third party service 9
provider used by the AFA in relation to the AFA’s financial
adviser services is independent unless the AFA has reasonable grounds
to believe the third party would be able to describe themselves as independent
under this Code Standard, if
the third party were an AFA.
The following are examples of circumstances where neither the AFA nor
the AFA’s provision of financial adviser services may be
described as “independent”:
(a) a related person of the AFA, or a related person of the AFA’s employer,
or principal, is the product provider of a financial product relevant to the
financial adviser service provided; or
(b) the AFA is subject to a contractual obligation to:
– recommend a particular financial product or financial
products; or
– limit the AFA’s recommendations or discretionary investment management services to a particular financial product or financial products; or
– attain or maintain a target in relation to a particular financial product
or financial products.
However, the contractual obligations falling within this paragraph (b) do not include the use of wrap account services, platforms, or other portfolio administrative or custodial services, where the use of such services
and the arrangements the AFA is able to put in place for the
AFA’s clients permit access to a wide range of financial
products and product providers; or
(c) the AFA or a related person of the AFA will or may
directly or indirectly receive a benefit from a person other than
the client for providing the services or from the client’s
acquisition of a financial product or products.
However, for the purposes of this paragraph (c) the following benefits do not affect an AFA’s ability to describe the AFA or the AFA’s services as independent:
– those that are paid, credited, or transferred to the
client; and
– those that are remote or insignificant; and
– those that are received by the AFA in the form of salary or wages as an employee, or in the form of fees as a contractor, that are not determined in whole or in part by reference to volume or other targets relating to a particular financial product or product provider.
CODE STANDARD 4
An Authorised Financial Adviser must not borrow from or lend to a
retail client.
This Code Standard does not apply if the
client is
(a) a related person of the AFA;
or
(b) in the business of borrowing or lending money or valuable property and
the AFA’s borrowing or lending is in the ordinary course of the
client’s business on terms consistent with the client’s
normal business terms.
This Code Standard does not prevent an AFA
or an AFA’s employer or principal from entering into
financial arrangements on behalf of a client as the client’s
agent to meet settlement obligations in relation to any financial
product.
An AFA must not arrange for the AFA’s
employer or principal to borrow from or lend to a retail
client, other than in the ordinary course of the employer’s or
principal’s business.
CODE STANDARD 5
An Authorised Financial Adviser must not provide financial advice
to a retail client in relation to a financial product that
is not offered to the public if the Authorised Financial Adviser
is a related person of the product provider of that
financial product.
This Code Standard does not
apply:
(a) if the client is a related person of the
AFA, or is a related person of the
AFA’s employer or principal; or
(b) if the AFA is satisfied on reasonable grounds that the AFA’s financial advice is appropriate for the client and, before the client makes a decision in relation to the financial product to which the financial advice relates, the AFA provides to the client in writing:
of how the AFA manages any conflict of interest arising as a result of
that relationship; and
(ii) a recommendation that the client takes financial advice from another
AFA who is not a related person of the product
provider.
The purpose of this Code Standard is to protect the interests of retail
clients
the opportunity to acquire, a financial product that is not offered
to the public. Accordingly, this Code Standard is very limited in its
application.
in relation to the acquisition of a financial product that is not able to be lawfully offered to the client.
Minimum standards
of client
care
CODE STANDARD 6
Pg 12 Behaving professionally
CODE STANDARD 7
Pg 13 Ensuring retail clients are able to make informed decisions
CODE STANDARD 8
Pg 13 Suitability of personalised services for retail clients
CODE STANDARD 9
Pg 14 Explaining the basis of personalised services for retail
clients
CODE STANDARD 10
Pg 15 Providing class services for retail clients
CODE STANDARD 11
Pg 15 Complaints processes
CODE STANDARD 12
Pg 16 Keeping information about personalised services for retail
clients
CODE STANDARD 13
Pg 17 Record retention
12 D Minimum standards of client care CODE STANDARD 7 13
An Authorised Financial Adviser must ensure each retail client has sufficient information to enable the client to make an informed decision about whether to use the Authorised Financial Adviser’s
CODE STANDARD 6
An Authorised Financial Adviser must behave professionally
in all dealings with a client, and communicate clearly, concisely,
and effectively.
When providing financial adviser services to a client, an
AFA must:
(a) provide only services that the AFA has the competence, knowledge,
and skill to provide; and
(b) provide the services and perform the AFA’s
obligations in a timely way; and
(c) transparently manage any conflicts of interest that may arise in providing
the services; and
(d) make recommendations only in relation to financial products that
have been analysed by the AFA to a level that provides a reasonable basis
for any such recommendation, or analysed by another person upon whose
analysis it is reasonable, in all the circumstances, for the AFA to
rely.
Communicating “effectively” for the purposes of this Code
Standard requires an AFA to take reasonable steps to ensure the client
understands the communication.
When transmitting the financial advice of another person to a
client, an AFA must take reasonable care to ensure that the
person providing the financial advice has an appropriate level of
competence, knowledge, and skill to provide that advice, and either:
• ensure the client is aware that the AFA has not prepared the financial
advice or assessed its suitability for the client; or
• accompany the financial advice with the AFA’s
own financial advice in relation to the same subject matter (in which
case the AFA may have further obligations under Code Standards 8 and
9).
When providing financial adviser services to a wholesale client, an AFA must take reasonable steps to ensure the client is aware that the client is regarded as a wholesale client for the purposes of the Act and the Code, and also is aware of the consequences of that status.
financial adviser services and/or to follow any financial advice
provided by the Authorised Financial Adviser.
The
information an AFA may be required to provide a retail client
under this
Code Standard includes (but is not limited to) information about any limits
on the scope of the AFA’s financial adviser services, the
AFA’s qualifications to provide those services, the fees the
client must pay, the benefits the AFA or any related
person of the AFA will or may receive, and any conflicts of interest
the AFA may have, in relation to the AFA’s financial adviser
services provided to the client.
In many circumstances an
AFA will satisfy the requirements of this Code Standard by complying with
the AFA’s disclosure obligations under the Act. However, in
some circumstances additional information may need to be provided to a retail
client to ensure the client has sufficient information
to be able
to make an informed decision.
The information required under this Code
Standard must be updated when there is any change in the AFA’s
circumstances that is material to the financial adviser services
provided by the AFA to the client.
CODE STANDARD 8
When providing a personalised service to a retail client an
Authorised Financial Adviser must take reasonable steps to ensure that
the personalised service is suitable for the
client.
An AFA is only required to determine
suitability under this Code Standard based on the information provided by the
client and information otherwise known to the AFA. However, an
AFA must make reasonable enquiries to ensure the AFA has an
up-to-date understanding of the client’s financial situation,
financial needs, financial goals, and tolerance for risk, having regard to the
nature of the personalised service being provided.
Where a
client:
(a) declines to provide some or all of the information required under this Code Standard, an AFA must take reasonable steps to ensure the client is aware that the personalised service is limited and specify those limitations; or
An AFA must not direct or influence a client to instruct the AFA not to determine the suitability of a financial adviser service to be provided for the client, or direct or influence a client to decline to provide any of the
information contemplated under this Code Standard. However, this restriction
does not prevent an AFA:
• drawing the client’s attention to the
client’s ability to opt out of having suitability determined as
contemplated under this Code Standard; or
• quoting or estimating a reasonable fee for determining suitability under
this Code Standard.
If the extent of an instruction given by a client under paragraph (b) of this Code Standard is such that the financial adviser service provided by the AFA to the client is not or will no longer be a personalised service, the AFA will then need to comply with Code Standard 10.
• the client has either instructed the AFA (or the AFA’s employer or 15
principal) or confirmed a prior instruction that an explanation under
this Code Standard is not required. Any such instruction or confirmation need not be in writing, but must reflect an unambiguous, active instruction or confirmation that is relevant to the personalised
service currently being provided.
The extent of any explanation
required under this Code Standard is determined by what a retail client
would reasonably require for the purpose of deciding whether to follow any
advice or guidance provided by the AFA.
An AFA must not
direct or influence a client to decline the explanation contemplated
under this Code Standard. However, this restriction does not prevent an AFA
from:
• drawing the client’s attention to the
client’s ability to opt out of receiving the explanation
contemplated under this Code Standard; or
• quoting or
estimating a reasonable fee for providing an explanation under
this Code Standard.
CODE STANDARD 10
When providing a class service to a retail client, an
Authorised Financial Adviser must take reasonable steps to ensure the
client is aware of the limitations of the service provided.
CODE STANDARD 9
Where an Authorised Financial Adviser provides a personalised service to a retail client that is an investment planning service or that relates to a category 1 product, the Authorised Financial
Adviser must provide a written explanation to the client of
the basis on which those services are provided. The Authorised Financial
Adviser must also take reasonable steps to ensure the client is
aware of the principal benefits and risks involved in following any financial
advice provided as part of that service, having regard to the
characteristics of the personalised service.
All explanations required under this Code Standard must be provided
to the client at the time the personalised service is provided
or as soon as practicable after that time. However, the requirement to provide
an explanation under this Code Standard
does not apply where:
• the AFA has previously provided the client with an explanation under this Code Standard that is sufficient to cover the personalised service provided; or
CODE STANDARD 11
An Authorised Financial Adviser must ensure there is an appropriate internal process in place for resolving client complaints in relation
to the Authorised Financial Adviser’s financial adviser
services.
The complaint resolution process under this Code
Standard must ensure that: (a) the client is, as soon as reasonably
practicable after making a complaint,
provided with acknowledgement of the complaint, information about the
AFA’s internal complaints handling process, and how to complain to
the Securities Commission and to any applicable external dispute resolution
scheme; and
(b) a register is kept recording all complaints, and action taken
towards resolving those complaints.
The complaints resolution
process required under this Code Standard is required in addition to the
AFA’s external dispute resolution scheme (if any).
16
CODE STANDARD 12
An Authorised Financial Adviser must record in writing
adequate information about any personalised services provided to a
retail client.
The information required to be recorded under this Code Standard in relation
to each retail client must include:
(a) information about:
(i) any personalised service provided or any financial product
recommended to the client; and
(ii) any required explanation, and advice as to suitability, given to the
client in relation to a financial adviser service or financial product; and
(iii) the results of any enquiry or any oral confirmation from the client
declining an explanation or suitability assessment under Code Standards 8
and 9; and
(b) copies of all information and documents provided to the client in writing, or received from the client, in connection with the AFA’s personalised services including –
(i) any information provided under Code Standard 7; and
(ii) any provision or confirmation of financial advice; and
(iii) any explanation provided in accordance with Code Standard 9; and
(iv) any instructions from the client declining to provide information or declining an explanation under Code Standards 8 or 9; and
(v) any instructions from the client declining or acknowledging any limitations of a suitability analysis in accordance with Code Standard 8; and
(vi) details of any complaint received in relation to the
AFA’s services.
An AFA who is an employee may satisfy the AFA’s
obligations under this Code Standard by taking reasonable steps to ensure
that relevant measures taken by the AFA’s employer are consistent
with the measures contemplated under this Code Standard.
An AFA must comply with all obligations under the Privacy Act 1993. Without limitation, this includes obligations in relation to the use and disclosure of clients’ personal information and the protection of that information from
loss and unauthorised access, use, modification, or disclosure.
17
CODE STANDARD 13
An Authorised Financial Adviser must ensure that records of all
information and documents required under this Code are kept for a minimum
of 7 years.
The 7-year minimum period required under this Code
Standard generally commences on the last date that the AFA provides a
financial adviser service to the client. However, for information
relating to a financial product transaction entered into by the
client, the 7-year minimum period for that
information commences on
the date that all benefits potentially available to the client from the
financial product have been realised, if that date is earlier than the
date that would otherwise apply.
The records required under this Code
Standard may be kept in electronic form, provided the records are readily
retrievable.
An AFA who is an employee may satisfy the
AFA’s obligations under this Code Standard by taking reasonable
steps to ensure that relevant measures taken by the AFA’s employer
(or the AFA’s previous employer, where applicable) are consistent
with the measures contemplated under this Code Standard.
Where an AFA
transfers the AFA’s financial advisory relationship with a
client to another financial adviser, the AFA may satisfy
the AFA’s obligations under this Code Standard by taking reasonable
steps to ensure that the other financial adviser keeps the records
contemplated under this Code Standard for at least as long as the AFA
would otherwise have been required to keep them.
Minimum standards of competence, knowledge, and skills
E Minimum standards of competence, 19 knowledge, and
skills required to provide financial adviser services
CODE STANDARD 14
Before providing a financial adviser service, an Authorised
Financial Adviser must have the competence, knowledge, and skills to provide
that service.
This Code Standard 14 applies in addition to the
requirements of Code
Standards 15 and 16 that relate to particular qualifications an AFA
must attain.
An AFA must be able to demonstrate that the
AFA has a reasonable basis
for believing that the AFA has the
level of competence, knowledge, and skills required by this Code
Standard.
CODE STANDARD 15
An Authorised Financial Adviser must have a knowledge of the Act, the Code, and other legal obligations relevant to the operation of the Authorised Financial Adviser’s practice as a financial adviser (including relevant consumer protection laws), that is adequate
for the proper operation of that practice.
An AFA must attain Unit Standard Set B and be able to
demonstrate the adequacy of the AFA’s knowledge of relevant
legislative obligations.
CODE STANDARD 14
Pg 19 Overarching competence requirement
CODE STANDARD 15
Pg 19 Requirement to have an adequate knowledge of Code, Act, and
laws
CODE STANDARD 16
Pg 20 National Certificate in Financial Services (Financial Advice) (Level 5)
requirement and alternative qualifications
20
CODE STANDARD 16
To be an Authorised Financial Adviser, a financial adviser must attain the Unit Standard Sets within the National Certificate in Financial Services (Financial Advice) (Level 5) that are relevant to the
financial adviser services provided by the AFA.
For the purposes of the Code, an Authorised Financial Adviser
is deemed to have attained a particular Unit Standard Set where the
Authorised Financial Adviser has attained an alternative qualification or
designation to that Unit Standard Set specified in the Code’s
Competence Alternatives Schedule.
An AFA who has attained Unit Standard Sets A, B, C, and D of the National Certificate in Financial Services (Financial Advice) (Level 5) is not restricted in the range of financial adviser services the AFA can provide or offer
to provide, subject to Code Standard 14 and the terms of the AFA’s
authorisation under the Act.
However, provided the AFA satisfies Code Standard 14 an
AFA:
(a) may provide a class service for any client, and any form
of financial adviser service for a wholesale client, without
having attained Unit Standard Set C or Unit Standard Set D;
and
(b) may provide a discretionary investment management service for a
client without having attained Unit Standard Set C; and
(c) may provide financial adviser services for a client
without having attained Unit Standard Set D if the AFA has
attained Unit Standard Set E and the financial products that might
be included within the scope of the financial adviser services provided
for the client concerned do not include any category 1
products.
If an AFA has attained Unit Standard Set D this Code Standard does not also require the AFA to attain Unit Standard Set E in order to provide financial adviser services that involve category 2 products, so long as the AFA satisfies Code Standard 14. For the purposes of this Code Standard, an AFA will be deemed to have attained Unit Standard Set E if the AFA has either passed both of the residential property lending units (units 26286 and 26287),
or the AFA has passed unit 25644 and at least one of units 25645, 25646, or 25647 (being units relating to insurance).
Competence Alternatives Schedule 21
For the purposes
of the Competence Alternatives Schedule:
• a designation previously attained that has not been retained at the time an AFA seeks authorisation will still be recognized for the purposes of the Schedule, provided the AFA has completed at least 20 hours CPD in the
12 months immediately before first becoming authorised, including at least
10 hours of structured training as described in Code Standard 18; and
• references to a qualification paper or designation being
“subject to the eligibility sunset” mean the relevant
qualification, paper, or designation must be fully attained at the time the
AFA seeks authorisation for the first time, and the qualification, paper,
or designation will only be recognised for authorisations that
come into effect
prior to 1 January 2014.
Minimum standards for continuing professional training
F Minimum standards for 23
continuing professional training
CODE STANDARD 17
An Authorised Financial Adviser must maintain and keep current a
professional development plan for each CPD period.
An
AFA’s professional development plan must:
(a) identify any areas for improvement in the AFA’s competence,
knowledge, and skills in relation to the financial adviser services he or
she provides or intends to provide;
(b) include the AFA’s
proposals for making those improvements; and
(c) where available,
include details of courses, seminars, workshops, and
any other training or professional development planned to be undertaken.
CODE STANDARD 18
An Authorised Financial Adviser must undertake sufficient
continuing professional training to maintain the Authorised Financial
Adviser’s competence at a level appropriate for the financial
adviser services the Authorised Financial Adviser provides or intends
to provide, and keep up to date with developments relevant to the Authorised
Financial Adviser’s practice.
An AFA must in each CPD period complete a minimum of 20 hours
of professional development relevant to the financial adviser services
the AFA provides or intends to provide.
That professional development must, in each CPD period, comprise at
least 10 hours of structured training.
CODE STANDARD 17
Pg 23 Professional development plan requirement
CODE STANDARD 18
Pg 23 Undertaking continuing professional training
To be structured training, the training must form part of the
requirements for a qualification on either the National Qualifications
Framework
or the national register of quality assured qualifications, or be part of a
structured continuing professional development
programme managed by a
DAO, QFE, or professional body.
(b) the date of completion; and
(d) a brief description of the CPD content covered by it;
and
(f) in relation to structured training, relevant third-party verification
of the successful completion of that training, such as confirmation
by the training provider or by the AFA’s employer or principal.
Competence Alternatives Schedule
26 G Competence Alternatives Schedule
27
For the purposes of the Code, a person wishing to be an AFA is treated as
having satisfied the requirements of a particular Unit Standard Set where the
ALTERNATIVE QUALIFICATION ALTERNATIVE DESIGNATION
person has attained an alternative qualification or designation as specified in
this Schedule.
References in this Schedule to a qualification, paper, or designation being “attained” or “subject to the eligibility sunset” are explained under the “Competence Alternatives Schedule” heading in Code Standard 16.
National Certificate
in Financial Services (Financial Advice) (Level 5)
Unit Standard Sets
Unit Standard Set B
For the purposes of the Code,
a person who has attained one of the following qualifications is treated as having satisfied the requirements of the specified Unit Standard Set
For the purposes of the Code,
a person who has attained one of the following designations is treated
as having satisfied the requirements of the specified Unit Standard
Set
ALTERNATIVE QUALIFICATION ALTERNATIVE DESIGNATION
(Comprising unit 26360) No recognised alternative No recognised
alternative
Knowledge of the
National Certificate in Financial Services (Financial Advice) (Level 5)
Unit Standard Sets
For the purposes of the Code,
a person who has attained one of the following qualifications is treated as having satisfied the requirements of the specified
For the purposes of the Code,
a person who has attained one of the following designations is treated as having satisfied the requirements of the specified
Code and consumer protection laws
Unit Standard Set
C
(Comprising units
• Certificate in Financial Services
• Associate Chartered Accountant
Unit Standard Set A
(Comprising units
• Any New Zealand-issued tertiary
• Associate Financial Planner
25650, 25651,
25652, and 25653)
from Adviserlink Learning Limited, • Chartered
Accountant
attained prior to 1 January 2010
24755, 25642, and 25643)
Knowledge of the
markets, the advice process and products
qualification at degree level or above in or majoring in accountancy,
business (including
business analysis), commerce, economics, finance, or management studies (including applied management)
• Graduate Diploma in Business Studies (Personal Financial Planning) (Massey University)*
• Graduate Diploma in Business Studies (Personal Risk Management) (Massey University)*
• Postgraduate Diploma in Personal Financial Planning (Waikato University)*
• Certificate in Financial Services
from Adviserlink Learning Limited
• New Zealand Stock
Exchange
Diploma (NZSE Diploma)
• NZX Diploma
• Associate Life Underwriter
• Certified
Financial Planner
• Chartered Life
Underwriter
• Member of the New Zealand Institute of Chartered Accountants (Accounting Technician, Associate Chartered Accountant, and Chartered Accountant)
• NZFMA Accredited individual
• NZX
Advisor
• NZX Associate Advisor
•
Registered Legal Executive
Professional practice advice process and complying with legislation
• Certified Financial Planner
• CFA
Charterholder
• Chartered Life
Underwriter
• NZX Advisor
in each case subject to
the
eligibility sunset
* in each case, including their respective predecessor diploma qualifications
28 ALTERNATIVE QUALIFICATION ALTERNATIVE DESIGNATION
ALTERNATIVE QUALIFICATION ALTERNATIVE DESIGNATION
29
National Certificate in Financial Services (Financial Advice) (Level 5)
Unit Standard Sets
For the purposes of the Code,
a person who has attained
one of the following qualifications is treated as having satisfied the
requirements of the specified Unit Standard Set
For the purposes of the Code,
a person who has attained
one of the following designations is treated as having satisfied the
requirements of the specified Unit Standard Set
National Certificate in Financial Services (Financial Advice) (Level
5)
Unit Standard Sets
For the purposes of the Code,
a person who has attained
one of the following qualifications is treated as having satisfied the
requirements of the specified Unit Standard Set
For the purposes of the Code,
a person who has attained
one of the following designations is treated as having satisfied the
requirements of the specified Unit Standard Set
Unit Standard Set D
(Comprising units
25648 and 25649)
Investment
Unit Standards
• Graduate Diploma in Business Studies (Personal Financial Planning) (Massey University)*, subject to the eligibility sunset
• Postgraduate Diploma in Personal Financial Planning (Waikato University)*, subject to the eligibility sunset
• New Zealand Stock Exchange
Diploma (NZSE Diploma)
• NZX Diploma, subject to the
eligibility sunset
• CFA Charterholder
Unit Standard Set E
(Comprising either
units 25644 and
25645, or units
25646 and 25647)
Insurance
Unit Standards
OR
Residential Property
Lending Unit Standards
• Graduate Diploma in Business Studies (Personal Risk Management OR Personal Financial Planning) (Massey University)*, provided the Diploma includes a paper on personal risk management, subject to the eligibility sunset
• Associate Life Underwriter
or Chartered Life Underwriter who has completed four papers from the Graduate Diploma in Business Studies (Personal Risk Management) (Massey University)* including a paper on personal
risk management, subject to the
eligibility sunset
• Associate Financial Planner or Certified Financial Planner who has completed four papers from the Graduate Diploma in Business Studies (Personal Financial
* in each case, including their respective predecessor diploma qualifications
Planning) (Massey University)* including a paper on personal risk management, subject to the eligibility sunset
• Chartered Life Underwriter who, prior to 1 January 2010, has attained the New Zealand Diploma in Life Assurance, the New Zealand Certificate in Life Insurance (Open Polytechnic), an Associateship
of the Insurance Institute of New Zealand (Life), or has completed the
personal risk management course provided by Adviserlink Learning
Limited
* in each case, including their respective predecessor diploma
qualifications
Definitions schedule
H Definitions schedule 31
In this
Code, unless the context otherwise requires, the following terms
have the meanings set out below. To assist, those terms are shown in italics wherever they appear in the body of the Code. Any term that is not defined in this Schedule, but is defined in the Act or in regulations made under the Act, has the same meaning in the Code as in the Act or in those regulations, as applicable.
category 1 product means any of the following products (other than
a product that is a category 2 product):
CFA Charterholder an individual entitled to use the chartered financial
analyst designation granted by the CFA Institute
(a) a security; or
(b) a land investment product (as defined by
regulations); or
(c) a futures contract; or
(d) an investment-linked contract of insurance
Chartered
Accountant
Chartered
Life Underwriter
has the same meaning as in section 2 of the New
Zealand Institute of Chartered Accountants Act 1996
means an
individual who has been awarded this designation by the Institute of Financial
Advisers Inc.
(as defined by regulations); or
(e) any other product specified by regulations made
under the Act; or
(f) a renewal or variation of the terms or conditions of an existing
category 1 product
category 2 product means any of the following products: (a) a bank term deposit; or
(b) any bonus bond; or
(c) any call building society share; or
(d) a call credit union share; or
(e) a call debt security; or
(f) a share in a co-operative company (as defined in section 2(1) of the Co-operative Companies Act 1996); or
(g) a unit in a cash or term portfolio investment
entity (as defined by regulations); or
(h) a consumer credit contract within the meaning of the Credit Contracts
and Consumer Finance Act 2003; or
(i) a contract of insurance (other than an investment-linked contract of
insurance); or
(j) a life insurance policy (within the meaning
class service a financial adviser service that is not a
personalised service
client means, in relation to
an AFA,–
(a) a person who receives a service from the AFA
(whether or not on payment of a charge); but
(b) does not include a person who receives any services from the AFA if the service is both provided and received in the course of, and for the purposes of:
(i) the same business; or
(ii) the businesses of related bodies corporate; or (iii) the businesses of members of a QFE group, irrespective of whether the person providing or
receiving the service is the person carrying on the business, a
controlling owner, a director, an agent, or any other
person
client information information about a
client
Code the Code of Professional Conduct for
Authorised
Financial Advisers approved by the Minister and brought into force by
Gazette notice under section 94 of the Act
Code
Standard a standard specified in the
Code
Certified
Financial Planner
of section 2(1) of the Securities Act 1978)
issued before 1 January 2009; or
(k) any other product specified by
regulations
made under the Act; or
(l) a renewal or variation of the terms and conditions of any existing
category 2 product
an individual who has been awarded this
designation by the Institute of Financial Advisers Inc.
Commissioner for
Financial Advisers and Commissioner
Competence Alternatives
Schedule
the person appointed under section 79(3) of the
Act
the schedule of this Code named as such
complaint an expression of dissatisfaction by a client to an AFA
about the AFA’s financial adviser services provided to the client, other than an expression of dissatisfaction that is trivial or vexatious or that the client indicates
is not intended to constitute a complaint for the purposes of the
Code
CPD continuing professional development or training
relevant to the financial adviser services the AFA provides
or intends to provide
CPD period in respect of an AFA, a 12-month period from the
day of the year specified for this purpose in the AFA’s terms of
authorisation or, in the absence of any such day being specified, a calendar
year with the first such period commencing on
the 1st day of January following
the AFA’s authorisation
DAO an entity registered by ETITO as a delegated
financial advice making a recommendation or giving an opinion
in relation to acquiring or disposing of (including refraining from acquiring or disposing of) a financial product, noting that whether or not advice is financial advice is not affected by how the advice
is given or communicated.
The mere provision of information or making
a recommendation or giving an opinion relating to a class of financial products, or making a recommendation or giving an opinion about
the procedure for acquiring or disposing of a financial product, or
transmitting the financial advice of another or recommending that a person
consult a financial adviser, does not amount to financial
advice
financial adviser a person who provides a financial adviser service
assessment organisation accredited for the provision of training and
assessment for Unit Standard Set C
director has the meaning given by section 126 of the
Companies Act 1993, but also includes, in relation
financial adviser service
giving financial advice, or providing an investment planning service, or providing a discretionary investment management service, in the ordinary course of business
to a body that is not a company, a person who occupies a position comparable to that of a
financial product a category 1 product or a category 2
product
discretionary investment management service
director (such as a trustee or a partner)
a service which an
AFA, acting under an authority granted to the AFA (or to the
AFA’s employer or principal) manages all or some of the
client’s holdings of financial product, and decides which
financial products to acquire or dispose of on behalf of the
client
internal complaints
handling process
investment planning service
an AFA’s internal process for handling and resolving
complaints as described in Code Standard 11
a service provided
by an AFA under which the AFA designs, or offers to design, a plan
for an individual that:
(a) is based on, or purports to be based on, an analysis of the individual’s current and future overall financial situation (which must include
eligibility sunset part of the transitional measures explained at Code
Standard 16 under the “Competence Alternatives
Schedule” heading
ETITO Electrotechnology Industry Training Organisation
Incorporated
his or her investment needs) and identification
of the individual’s investment goals; and
(b) includes 1 or more recommendations
or opinions on how to realise those goals
(or 1 or more of them),
external dispute resolution scheme
in respect of an AFA, the scheme under section 48 of the Financial
Service Providers (Registration and Dispute Resolution) Act 2008 to which any
complaint
concerning the AFA must be referred
regardless of whether the analysis and identification
is of the individual’s particular financial situation and goals or of
the financial situations and goals attributable to a class
of persons
that the individual is identified as coming within
Minister
has the same meaning as in section 5 of the Act
NZFMA
Accredited individual
NZX Advisor and NZX Associate Advisor
an individual who has achieved accredited individual
status following the completion of the New Zealand Financial Markets
Association Financial Services Accreditation Program
an individual who
has been accredited and approved by NZX as an NZX Advisor or NZX Associate
Advisor (as applicable) as provided in
the NZX Participant Rules
principal a person who is the principal in an
agency relationship
product provider means:
(a) the issuer, in the case of a security:
(b) the creditor, in the case of a consumer credit contract (within the meaning of the Credit Contracts and Consumer Finance Act 2003):
(c) the insurer, in the case of a contract of
offered to the public in relation to a security, has the same meaning as
the construction of references to offering securities to the public in section 3 of the Securities Act 1978;
and in relation to any other financial product means the financial product is being or has been offered to:
(a) any section of the public, however selected; or
(b) individual members of the public selected at random; or
(c) a person if the person became known to the offeror as a
result of any public advertising of the offeror that was intended to likely to
result in the public
seeking further information about the financial
product
person includes an individual, a corporation sole, a body
insurance (other than an investment-linked contract of insurance):
(d) the person specified by regulations in any
other case
professional body a membership-based organisation whose principal activities are associated with the financial services industry in New Zealand where ongoing membership requires compliance with continuing professional development or training requirements specified
by the organisation
QFE an entity that is registered and has QFE status or a number of partner entities that are each registered and jointly have QFE status
corporate, and an unincorporated body (including the trustees of a
trust)
personalised service a financial adviser service:
(a) given to or in respect of a named client or
a client that is otherwise readily identifiable
by the AFA; and
(b) the AFA has taken into account the client’s particular financial situation or goals (or any one or more of them) in providing the service, or the client would, in the circumstances in which the service is provided, reasonably expect the AFA to take into account the client’s
particular financial situation or goals (or one or
any more of them),
however, a service is not personalised merely because the client comes within a class of persons having predefined characteristics and the AFA
takes the fact that the client comes within that class into account
Registered
Legal Executive
an individual who is entitled, under the Rules of the
New Zealand Institute of Legal Executives Inc, to use the designation registered legal executive
38
related person (a) in relation to an individual, a parent, child,
sibling, spouse, de facto spouse, civil union partner, employer, or business partner of that individual, or a principal on whose behalf the individual provides financial adviser services by way of a contract for services; and
(b) in relation to a body corporate A: (i) a person who
• is also a body corporate; and
• either has substantially the
same shareholders as A; or
• is under the control of the same
person or persons as A; or
(ii) a person who is able, directly or indirectly, to –
• exercise, or control the exercise, of 25% or more of the voting at a meeting of the shareholders of A; or
• appoint or control 25% or more of
a governing body of A
retail client a client who is not a wholesale
client
security has the same meaning as in section 5 of the
Act
unit a unit standard forming part of the National
Certificate in Financial Services (Financial Advice) (Level 5) on the
National Qualifications Framework
Unit Standard Set a set of units specified in the National Certificate in Financial Services (Financial Advice) Level 5, with Unit Standard Sets A, B, C, D and E comprising the respective units specified
in the Competence Schedule
wholesale client a client classified as a wholesale
client under section 5C of the Act
written or in writing includes in electronic form.
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