While the Financial Markets (Conduct of Institutions) Amendment Bill (CoFI) is still more than six months away from being passed, industry experts say businesses should already be preparing for its effects on conduct and commissions.

Parliament began the Bill's second reading on June 10, but the Bill has remained on Parliament's Order Paper due to Covid-19 restrictions since then.

However, viewers of yesterday's Financial Services Council webinar - "CoFI in Focus" - were given some strategies to overcome the challenges of implementing the Bill when it is expected to be passed around July next year. 

CoFI will see businesses needing to apply for a new conduct licence from the Financial Markets Authority (FMA) for the principles-based scheme that will also limit the payment of incentives-based commissions and set out what is required for the conduct of intermediaries.

Head of conduct and culture at AIA, Amy Cunningham says the insurer has already started implementing good conduct principles by including them in adviser agreements and mandatory conduct training for staff.

She says businesses should be pulling resources together now and setting "the tone from the top" is also important.

Cunningham says CoFI probably won't be as challenging as FSLAA and that most of the industry has already removed soft incentives - but advisers will always pay to the whistle - "a lack of transparency around commissions can be problematic".

Lawyer Tim Williams, a partner at Chapman Tripp, says while a lot of detail is yet to be revealed, especially on how CoFI will affect intermediaries, he expects linear commissions will still be acceptable and would like to see more guidance on the definition of the term "fairness".

He says due regard has been given to the interests of the consumer, "...but this is a very opened ended definition and leaving it to the courts to determine this would be a very poor outcome".

"Fairness should take account of both sides interests - but there is no recognition balancing the needs of providers."

Partners Life chief risk officer Beckie McCleland says incentives are not necessarily bad and can be supportive of advisers and customers with possible solutions being a fee for service or package solutions being implemented.

She says CoFI and FSLAA are complementary pieces of legislation and hopes they don't double up on regulatory requirements for small to medium-sized businesses that are already dealing with challenges around FSLAA.

Better use of technology, especially data and analytics, will also be important, says Compliance Refinery director Steve Burgess.

"How to identify risk points and when clients need to be serviced should also be looked at now...but it's an opportunity for businesses to rethink their models and get organised for the future."

Burgess says putting fresh systems in place could be expensive and advisers should be wary of what is contained within agency agreements and what they are signing up for.

The FMA's director of banking and insurance Clare Bolingford says the regulator wants to work with the industry and is preparing a dedicated team to support the implementation of CoFI along with its licencing approach, monitoring framework and engagement model.

She says the FMA has learned a lot from FSLAA and will try not to double up on information already collected for the financial advice licencing process.

The FMA will use a tailored approach depending on the type of entity it is dealing with, its size and the risk they pose to consumers.

"This is not just saying the customer is always right, but there is a balance and all sorts of considerations are taken into account...and we will share good practise examples when we see them."