The revised draft of the new code was released this month, and submissions on it closed last week.

Among the changes made to the code were moves to make it clearer that code standard one – the requirement that advisers act in clients’ best interests – was the overriding concern, and changes to code standard five, regarding conflicts of interest, which simplifies rules around any conflicts that might arise.

Advisers are required to identify and clearly and effectively communicate to their client all of their, or a related person’s, interests that might influence the services they provides to the client.

Where a conflict of interest is such that an AFA is unable to place the interests of the client first, the AFA must decline to act.

Chapman Tripp senior associate Emma Harding said the commitment should consider including some form of “reasonableness” assessment in the new prohibition against conflicts of interest by adding “in the manner required by Code Standard 1” or “to the extent reasonable in the circumstances” after the reference to “unable to place the interests of the clients first”.

She said that would allow advisers to act for buyers and sellers provided they had suitable protocols to ensure both were treated fairly, sharebrokers to scale allocations of scarce investments between their clients, for disclosed Chinese wall arrangements within firms to deal with conflicts such as an IPO where the broker may be acting for the seller/issuer as a lead manager, and for agreed fee arrangements, even though charging or increasing fees is not placing clients’ interests first. “They would rather not pay a fee if they didn’t have to.”

She said: “Without a clarification that at least acknowledges that a reasonable approach would be taken, the code standard would prohibit acting in cases where there is a technical conflict of interest …  It would be better still if the exception included a concept of fairness between all parties.”

Harding said that could be done by adding “except where the AFA can demonstrate that the client has been treated fairly in the circumstances” after the reference to “unable to place the interests of the clients first, the AFA must decline to act”.