The code requires competence equal to that of the outcomes of the level five certificate in financial services.

That is a level already required of AFAs but not of RFAs.

But the code also allows for advisers to demonstrate their competence in other ways, such as by filling in gaps with the processes and systems of their employers.

Angus Dale-Jones, chairman of the working group that developed the code and who will head the code committee once it takes effect, has said that was not a backdown from requiring the level five standard across the industry.

He said it would be harder in most cases to prove competence through means other than simply having the qualification.

But David Whyte, an industry commentator and director, said many RFAs had also spotted an opportunity for them.

"Angus may not think the code is a back-down from level five but the alternative paths to equivalence are being interpreted by RFAs  as exactly that," he said.

"Reading section two wording, it's hard to interpret the meaning that Angus ascribes. My experience plus a dealer group's or VIO's processes, systems, and expertise is another way of expressing the in aggregation concept from the first draft released."

David Greenslade, executive director of training provider Strategi, said more clarity would be welcome on how an adviser could rely on a financial advice provider's procedures, systems and expertise to fill in gaps in their own competence.

"Strategi Institute believes that relying exclusively on a FAPs procedures, systems and expertise will be an expensive undertaking for most businesses and may only work adequately if the FAP has a narrow product range. It is likely only the larger end of town may adopt this approach and even then, it is likely they will ensure many of their staff have attained the level five qualification."

Dale-Jones said the code's competence standards appllied evenly across all advice situations, but the way they would operate at a practical level was influenced by Financial Services Legislation Amendment Act's  liability provisions and duties.

"A financial adviser who does not comply with a FSLAA duty, such as the duty to meet the competence standards, may be held personally liable for disciplinary action, deregistration or suspension. That is a strong incentive for the financial adviser to meet the competence standards personally," he said.

For nominated representatives, the financial advice provider business (FAP) that may be held civilly liable for non-compliance with a duty, not the individual nominated representative

"The FAP will have an increasingly complex compliance and licensing burden the more reliance they place on their procedures, systems and expertise rather than on the individual skill of their NRs.

"Compliance with the competence standards is likely to be relatively straightforward if the NR has a tightly controlled advice scope, or conversely if the NR holds Level 5. Compliance gets trickier the broader (or less controlled) the advice scope becomes or the more reliance is placed on procedures as a substitute for the NR holding Level 5.

"So in a situation where a dealer group is the FAP (or alternatively where an FAP places reliance on a dealer group) the extent to which reliance can be placed on the dealer group depends on the NR's advice scope and how the FAP takes on compliance responsibility to support it. In short, not doing Level 5 comes with compliance and liability consequences for the FAP."