The main changes from the current code include:
- Clarification that code standard one is paramount. This requires advisers to place the interests of their clients first and act with integrity.
- A provision allowing AFAs to advise on KiwiSaver first-home withdrawals without sitting investment qualifications.
- Increasing the number of structured professional development hours AFAs are required to undertake over two years from 20 to 30 hours, while broadening the definition so there is more flexibility in determining what counts as structured.
- A new code standard for transparently managing conflicts of interest.
- Restructuring the key code standards relating to minimum standards of client care.

Committee chair David Ireland said: “It became clear during the consultation process that the Code’s principles-based approach is supported by the adviser industry. The proposed changes therefore align with this approach but clarify certain principles, particularly where uncertainty as to their application was expressed.”

The final version of the code has to be approved by the FMA before it can be sent to the Commerce Minister for final acceptance.

The Code is expected to come into force mid-2014.

It comes as the FMA released its latest stakeholder feedback report, in which it noted concerns about the requirements for AFAs. It said that there were broad concerns among those it spoke to that the adviser licencing requirements were not strong enough, there was a perception that insufficiently-qualified advisers were operating, that the RFA designation was meaningless and that QFE advisers were under-regulated.

A number of participants said the legislation was resulting in double-standards between AFAs, RFAs and QFEs.

The only stakeholders spoken to who have significant contact with the adviser sector were AMP’s Jack Regan, Sam Stubbs of Tower, Tony Vidler, of Strictly Business, and Stuart Auld, of Morningstar.

The FMA said it had been aware of the concerns for some time but it was the Code Committee’s job to review the standards required of AFAs.

“There is no plan to require RFAs to move to AFA status however the RFA designation is an issue of concern which FMA has already raised with MBIE and the Minister of Commerce.”

Peter Leitch, former president of the PAA, said adviser numbers were going down and it was difficult to understand why AFA credentials would be a major concern.

More important, he said, was the ability of people to access advice. He said it was worth looking at what sort of advice was involved when the main providers encouraged people to switch their KiwiSaver accounts.  “It’s more important to look at what advice is given in that context than whether AFAs ought to have level six rather than level five.”