Looking forward, to a point after we have revised the Financial Advisers Act regime is difficult. We don’t have three things: we don’t have draft legislation, or the Code that will apply under that, or the conduct guide that might apply. But looking at the cabinet paper on the proposed Financial Services Legislation Amendment Bill we note that it has this to written about limiting scope:
“The definitions of personalised advice and class advice are removed to enable simple and sensible advice conversations. This does not mean that all advice would have to be fully comprehensive or follow a full client needs analysis, rather that the scope of services could be tailored based on factors such as the consumer’s wishes and the areas of competence of the adviser.“
Which is welcome, and entirely consistent with the new, current, AFA Code standard eight. On the other hand, the draft conduct guide, being consulted on by the FMA appears to have a different view, take this from page ten, for example:
How do you know you are good at knowing your customers, including their level of financial sophistication? Are you good at helping the least sophisticated to identify their needs, including that their needs may be better met by a product or service you don’t offer? How do you know that the performance of your products and services is consistent with good outcomes for customers? How do you know that customers will have the same or better outcome with your services and products as they would have with similar services and products offered elsewhere? And how do you communicate all of that?
Of course, that would apply only to licensed entities under the financial market conducts act, and there is no written indication that this would apply to entities that may end up being required to be licensed under the FSLAB. However, our concern is that this guide would likely form a basis for the future conduct guide which would probably apply to all such entities. You have an opportunity to consider this and make your submissions on the draft conduct guide at this link.