Best interest 'unworkable'
Advisers operating under the code of conduct in New Zealand are required to put their clients’ interests first – but are not subject to the broader standard, imposed in some other countries, of acting in the clients’ best interests.
The latest recommendations from the Ministry of Business, Innovation and Employment indicate that the “client first” standard is set to be applied across all financial advisers under the new Financial Advisers Act regime.
But it has been argued, including by John Berry here, that the industry should consider changing the standard to “best interest,” to hold advisers to the same level as lawyers, dentists, fund managers and real estate agents.
David Ireland, chairman of the Code Committee, said there had always been a “vocal minority” who thought advisers should have to operate under the best interest standard, or have a fiduciary duty to a client.
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