SiFA has filed a supplementary submission to the working group developing a new code of conduct for the financial advice sector.

It said, rather than impose a level five standard for anyone offering retail product advice and a degree standard for anyone doing financial planning, the code should only require education standards of financial advisers.

Nominated representatives, who operate under the umbrella of a financial advice provider that would take on many of their compliance obligations, should not have any such requirement, SiFA said.

Chairman Murray Weatherston and consultant Robert Oddy resiled from their earlier suggestion that the base standard for the industry should be level five.

"We now submit that there should be no legislated competence requirements for nominated representatives," they said. "It strips away the illusion that nominated representatives are advisers.

"There would no longer be a need for say 20,000 nominated representatives to become qualified, thus removing pressure from the educational sector; there would be no need to set up a complex system to evaluate whether a financial advice provider had sufficient capability to administer an equivalent education programme to Level five (in order to work around a probable lack of capacity in the education sector to handle 25,000 persons);  there would be no need for any workaround like your suggestion of combined expertise or in aggregate."

Weatherston and Oddy said it would provide a clear distinction in the market.

Financial advisers would have an educational requirement to demonstrate competence, whereas nominated representatives would not.

"Under the Bill, the financial advice provider has to have in place processes controls and limitations to regulate what the nominated representative can and cannot do. We think the financial advice provider should be able to give very little and probably no advisory discretion to a nominated representative, given the nominated representative’s lower personal responsibilities compared with a financial adviser.

"As a result, it would be totally misleading to suggest that the nominated representative was actually advising the client. What the nominated representative would be giving the client would be something that had been pre-packaged by their licensed financial advice provider."

Nominated representatives should still have ethical obligations, they said.

"This submission is not intended to discourage financial advice providers from arranging proper training for their nominated representatives. Far from it, it is important that their employees are trained, but it will be left solely to the financial advice provider to determine what that training is, and they will not be able to hide behind a regulated requirement."

Financial advice providers should also be prohibited from calling their staff "insurance advisers", "mortgage advisers" or "KiwiSaver advisers", they said, to provide further clarity.