Financial advice provider compliance, arguably, starts with governance.

Yet the focus of recent years has been mainly on education, or Code.

Education has been an easy place to look.

The regulators set a standard. It has been talked about it, written about, and is a clear, defined milestone on the way to achieving a compliant business: get the qualification.

But arguably, it is the least urgent of all mandatory requirements. After all, the new regime commences in March next year with a two-year window to achieve the required educational standard.

Code comes next – it is also a good focus, also critical to operating a compliant business.

It is the standard that must be hit in the new regime.

I am probably doing it a disservice when I say it is "only" about financial advice. Of course, as a financial advice provider this is the heart of what you do. It is also not descriptive of everything that you do.

Each quarter we track all the legal and regulatory issues that directly affect the provision of financial advice. That includes non-advice legal and regulatory requirements.

To pick a topical one, consider privacy. As new privacy law creates changed requirements for all businesses, these include financial advice providers.

They must be met. But your review must also include all non-law or regulatory requirements of your business – these are contractual commitments that you make.

For example, agency agreements with product providers include a list of commitments that you must maintain in order to retain your agency. These must also be managed.

As a business grows managing all the different requirements takes more time and effort – because your services are more complex, reach more people, and are delivered by employees rather than an owner-operator.

Hence, the importance of governance.

Good governance is a process that enables effective compliance by the business.

It is the operating system that ensures the business conforms to its plans and commitments (the rules we choose for ourselves) and the relevant laws and regulation (the rules chosen by others in our society).

If you have ever come back from a conference with a bright new idea, tried to make it happen, and then realised six months later that you haven’t been able to make that change … it is a good sign that a governance gap may exist.

In practice, most small businesses already have a goal to achieve better governance.

It is a lot like the saying about planting trees. The best time to plant one was twenty years ago. The second-best time is now. But definitely before March next year.

If you were in any doubt about whether this is a requirement – just like the Code, the standard conditions, or the educational standards, then please read the FMA’s guide to governance.