An exposure draft of the Financial Services Legislation Amendment Bill is out for consultation.

The committee has made public its submission.

In it, is says extending the code to all advisers is an improvement.  But it was a concern that financial advice representatives would not be personally accountable.

“We appreciate the logic behind not requiring financial advice representatives to separately register, and recognise that breaches by financial advice representatives are just as likely to be attributable to the financial advice provider as the representative, consistent with the current approach for QFE advisers," chairman David Ireland said.

“However, we are concerned that this may undermine public confidence in the regime, as there is no mechanism for preventing a financial advice representative who personally acts in breach of the New Code from moving from one financial advice provider to another with no public record of past misdemeanours.”

He said it could help to call financial advice representatives “provider representatives” instead.

But Ireland said the committee’s overarching concern was that the exposure draft had strayed from a principles-based approach into something more prescriptive that would negatively affect the new regime.

In particular, the committee is worried by the duty to put clients' interests first, as expressed in the draft.

“Client first, as expressed in the current code, is a paramount obligation. It is a philosophical statement as to how financial advisers subject to the code are expected to behave in any scenario. It is aspirational in nature. Treating it as a black letter law concept is not appropriate.”

He said code standard one never lent itself to being enforced in court. "It is an obligation that lends itself perfectly to being expressed in a code of conduct where a disciplinary committee might be expected to take a broader consideration of a financial adviser’s duties.”

Ireland said the committee felt that, if the objectives of the regulatory regime were to be achieved, all advisers should be required to put the consumer first. That was the basis for it supporting the elevation of code standard one into the legislation.

But in the draft it had been reduced to simply a conflict of interest question. The way it was worded might stop the committee including provisions in the future code to elaborate on what was meant by placing clients' interests first, he said.

The committee also did not support the formulation of a new duty to agree on the nature and scope of advice. This is something the committee has pondered in depth lately, as it rewrote the existing code to address limited advice.

It recommended changes to the regulatory exemptions for accountants and lawyers, including introducing conduct obligations for those offering exempt advice.

Ireland said it was disappointing the committee had not been given wider functions under the bill - it would have liked to have been able to liaise with the Minister, FMA and stakeholders in relation to the code's application and enforcement.