The Code – issues for advisers (Part Three)

Part Three of Your guide to the new code looks at the vexed issue of grandfathering and how to make a submission. If you want your voice heard time is running out.

This is Part 3 of the commentary looking at the new Code of Conduct and issues, opportunities and challenges for adviser businesses. It is written by John Berry, a member of the Code Working Group (CWG), in his capacity as a commentator on NZ financial markets and as CEO of Pathfinder.  This commentary therefore contains his personal opinions and is not written on behalf of the CWG. 

I’d encourage you to read Parts One and Two of this commentary before this final instalment.  This part is very short - covering thoughts on how to submit, as well as ethics and grandfathering/transitioning for advisers.  First up, how to submit.


Writing submissions takes time, which we’re all short of.  You have a couple of options:

  • use the submission format provided by the CWG and answer the questions provided (see link at the end of this article – you can choose which questions you want to answer, you are not obliged to answer them all) or
  • you can simply write your ideas on specific issues (you do not have to use the CWG submission form nor reference the questions provided)
  • Then send your submission by email to before 5pm on 30 April.  That is only days away.

Different perspectives

I’d encourage you to think about issues from the three angles below (which are not listed in order of importance):

  • You as an adviser – What is the impact on your business or future career as an adviser?  This could include your thoughts around business compliance costs, retraining requirements and changes you may need to make to your client service. 
  • The advice industry as a whole –  Will proposals lead to higher levels of professionalism in the industry?  Will changes encourage new entrants to the industry? Are proposals fair to all parts of the industry? Do any proposals have unintended consequences?
  • Consumers –– Your views on impacts for consumers are very important (consumers can be your clients and also the wider public).  Will proposals build confidence for consumers to seek advice? How will the availability and quality of advice be impacted?

If you have useful examples that you think are relevant and pose difficult practical challenges for you as an adviser, please submit them.

Transitioning for RFAs

The CWG consultation paper suggests that AFAs should be assumed to meet minimum standards for “particular competence, knowledge and skill.”  This means AFAs would be “grandfathered” on the basis they are already working in an FMA regulated environment. 

There is no similar grandfathering proposal for RFAs.  Do you agree with this approach?  Do you have a suggestion to grandfather RFAs?  (Note that simply saying “an RFA has been an adviser for XXX years and therefore should be grandfathered” is not in itself likely to be sufficient – there needs to be some objective way to establish competence).  If RFAs are not to be grandfathered, the Bill allows for transition periods – what would you suggest is appropriate?


High standards of business ethics are critical in financial services.  This has been well illustrated by the disgraceful behaviour uncovered by Australia’s Royal Commission.

A number of points are raised in the CWG consultation paper on achieving and maintaining high standards of ethics for financial advice.  You could think about whether one level of ethics should apply across all advisers, and whether different/additional ethical standards need to be imposed on organisations (i.e. on Financial Advice Providers).  The Bill includes a provision on conflicts of interest – which raises the question of whether the Code should also explicitly address conflicts management.  And finally does each business need a clear framework for dealing with ethical dilemmas?

These questions are just to get you thinking – many more are raised in the consultation paper.

And that is it.  Please submit your thoughts by the 5pm deadline on 30 April – your submissions will help shape of the Code. 

John Berry is co-founder and CEO of Pathfinder Asset Management, a boutique responsible investment fund manager.  He is also a member of the Code Working Group.

Useful links:
The Code Working Group’s consultation paper and submissions template are available here

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