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Code of Professional ConductFor Authorised Financial Advisers

Please refer to the updated version available here -http://fma.govt.nz/compliance/role/afas/your-on-going-obligations/

code-of-professional-conduct/

http://fma.govt.nz/compliance/role/afas/your-on-going-obligations/code-of-professional-conduct/

The Code of Professional Conduct for Authorised Financial Advisers was approved by the Minister of Commerce under section 92 of the Financial Advisers Act 2008 on 21 September 2010. The Code was published in the Gazette by the Commissioner for Financial Advisers on 28 October 2010. It came into force on 1 December 2010.

Financial Markets Authority Level 8, Unisys House56 The TerraceP O Box 1179Wellington 6140New Zealandwww.fma.govt.nz

May 2011

ISBN 978-0-478-36871-0 (print) ISBN 978-0-478-36872-7 (online)

Contents

A BAckground 4

B IntroductIon 5

c MInIMuM stAndArds of ethIcAl BehAvIour 6

Standard1 Placingclientinterestsfirstandactingwithintegrity 7Standard2 Notbringingthefinancialadvisoryindustryintodisrepute 7Standard3 Usingtheterm“independent” 8Standard4 Borrowingfromorlendingtoaclient 9Standard5 RestrictionsthatapplywhereAFAisrelatedperson 9

ofproductprovider

d MInIMuM stAndArds of clIent cAre 11

Standard6 Behavingprofessionally 12Standard7 Ensuringretailclientsareabletomakeinformeddecisions13Standard8 Suitabilityofpersonalisedservicesforretailclients 13Standard9 Explainingthebasisofpersonalisedservices 14

forretailclientsStandard10 Providingclassservicesforretailclients 15Standard11 Complaintsprocesses 15Standard12 Keepinginformationaboutpersonalisedservices 16

forretailclientsStandard13Recordretention 17

e MInIMuM stAndArds of coMpetence, knowledge, And skIlls 18

Standard14 Overarchingcompetencerequirement 19Standard15 Requirementtohaveanadequateknowledge 19

ofCode,Act,andlawsStandard16 NationalCertificateinFinancialServices(FinancialAdvice) 20

(Level5)requirementandalternativequalifications

f MInIMuM stAndArds for contInuIng professIonAl trAInIng 22

Standard17 Professionaldevelopmentplanrequirement 23Standard18Undertakingcontinuingprofessionaltraining 23

g coMpetence AlternAtIves schedule 25

h defInItIons schedule 30

3

A Background

ThisistheCodeofProfessionalConductforAuthorisedFinancialAdvisersforthepurposesoftheFinancialAdvisersAct2008.

ThissectionoftheCodeprovidesabriefoverviewofthescopeandaimsoftheCode.TheremainderoftheCodecontainstheoperativeprovisionswhichmustbecompliedwithbyallAuthorised Financial Advisers.

Financial advisersarerequiredtobeauthorisedundertheFinancialAdvisersAct inordertoprovideapersonalised service to a retail clientthatis:

(a) financial advice or a discretionary investment management service in relation to a category 1 product; or

(b) aninvestment planning service.

Financial advisersmayalsoelecttobecomeauthorisedundertheActinothersituationsspecifiedinregulationsmadeundertheAct.AsatthedateofthisCode nosuchregulationshavebeenmade.

TheoverarchingpurposeoftheFinancialAdvisersActis“topromotethesoundandefficientdeliveryoffinancialadviserandbrokingservices,andtoencouragepublicconfidenceintheprofessionalismandintegrityoffinancialadvisersandbrokers”.

OneofthekeywaystheActseekstoachieveitspurposesinrelationtofinancial adviser servicesisbyrequiringallAuthorised Financial Advisers (alsoreferredtoasAFAs)tocomplywithacodewhichprovidesforminimumstandardsofprofessionalconduct.TheoverarchingpurposeoftheActprovidesthespiritunderpinningtheCode.WhenconsideringtheirconductanddisclosureobligationsundertheAct andtheCode, AFAsshouldhavethatspiritinmind.

TheActrequirestheCodetocontainminimumstandardsofcompetence,knowledge,andskills,ofethicalbehaviour,andofclientcare.TheCodeisalsorequiredtoprovideforcontinuingprofessionaltrainingforAuthorised Financial Advisers,includingspecifyingrequirementsthatanAFAmustmeetforthepurposeofcontinuingprofessionaltraining.AFAsmaybedisciplinedforbreachesoftheCode.

AnumberoftheCode StandardsincludereferencetolegalobligationsthatwouldapplytoAFAsirrespectiveoftheCoderequirements.Suchreferencesareincludedlargelyforthesakeofcompleteness.However,theCodedoesnotrefertoalllegalobligationsofAFAs.AFAsmustcomplywithallapplicablelaws,whetherornotreferredtointheCode.

ThisCodehasbeenapprovedbytheMinisterundertheFinancialAdvisersActandcomesintoforce,eitherinpartorinfull,onadateordatesspecifiedbyGazette noticeundersection94oftheAct.TheCommissionermayspecifydifferentdates forthecommencementofdifferentprovisionsofthisCode.

4

ABACKg

ROUN

d

EachstandardinthisCodeconsistsofanoverarchingprincipleidentifiedasaCode Standard togetherwithadditionalprovisionsthatcontainfurtherdetailabouttheapplicationoftheCode Standard.

Unless otherwise stated, the additional provisions do not limit the application of the overarching principle under which they are stated, or the application of any other Code Standard. AFAs must apply the Code Standards in a way that encourages public confidence in the professionalism and integrity of financial advisers.

TermsusedinthisCodethatappearinitalicsaredefinedinthe definitionsschedule.

ThisCodedoesnotlimitanAFA’slegalobligations,includingthose undertheAct.

B Introduction 5

BINTROd

UCTION

Minimum standards of ethical behaviour

code stAndArd 1

Pg7 Placingclientinterestsfirstandactingwithintegrity

code stAndArd 2

Pg7 Notbringingthefinancialadvisoryindustryintodisrepute

code stAndArd 3

Pg8 Usingtheterm“independent”

code stAndArd 4

Pg9 Borrowingfromorlendingtoaclient

code stAndArd 5

Pg9 RestrictionsthatapplywhereAFAisrelatedpersonofproductprovider

code stAndArd 1

An Authorised Financial Adviser must place the interests of the client first, and must act with integrity.

C Minimum standards of ethical behaviour

This Code StandardappliestoanyactivityofanAFAthatrelatestotheAFA’s financial adviser services.

Whatisrequiredtoplaceaclient’sinterestsfirstforthepurposesofthisCode Standardisdeterminedbywhatisreasonableinthecircumstances,includinganyregulatoryobligationsbindingontheAFAinadditiontotheCode.

AnAFAisrequiredtoadviseaclientonlyinrelationtofinancial products or mattersthatarewithinthescopeofthe AFA’s financial adviser services,asadvisedtotheclient in writing.AnAFAisnotrequiredtoconsiderorprovidefinancial adviser services in relation to financial productsormattersthatarenotwithinthatscopeinordertocomplywiththisCode Standard.

AnAFA’sobligationunderthisCode Standardtoplaceaclient’sinterestsfirstwillnotbebreachedbyreportingtotheSecuritiesCommissionanybreachesoftheActthattheAFAreasonablybelievestohaveoccurred.

code stAndArd 2

An Authorised Financial Adviser must not do anything or make an omission that would or would be likely to bring the financial advisory industry into disrepute.

This Code Standard prohibitsanAFAfromconductthatwouldunderminepublicconfidenceintheprofessionalismorintegrityofthefinancialadvisoryindustry.However,thisCode StandarddoesnotpreventanAFAfromcommentingingoodfaithonthebusiness,actions,orinactionsofanyperson (includinganyother financial adviser,financialadvisergroup,financialserviceproviderorindustrybody)orfromexercisingtheAFA’sreportingpowersundersection45AoftheAct.

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CMINIMUM

STANdARd

SOFETHICALBEH

AvIOUR

code stAndArd 3

An Authorised Financial Adviser must not state or imply that the Authorised Financial Adviser is independent, or that any financial adviser services provided are independent, if a reasonable person in the position of a client would consider that the Authorised Financial Adviser or the services provided are not independent.

ThefollowingareexamplesofcircumstanceswhereneithertheAFA northeAFA’sprovisionoffinancial adviser servicesmaybedescribedas“independent”:

(a) arelated personoftheAFA,ora related personoftheAFA’semployer,or principal,istheproduct provider ofafinancial productrelevanttothefinancial adviser serviceprovided;or

(b) theAFAissubjecttoacontractualobligationto:

– recommendaparticularfinancial product or financial products; or

– limittheAFA’srecommendationsordiscretionary investmentmanagement servicestoaparticularfinancial product or financialproducts; or

– attainormaintainatargetinrelationtoaparticularfinancial productor financial products.

However,thecontractualobligationsfallingwithinthisparagraph(b)donotincludetheuseofwrapaccountservices,platforms,orotherportfolioadministrativeorcustodialservices,wheretheuseofsuchservicesandthearrangementstheAFAisabletoputinplacefortheAFA’s clientspermitaccesstoawiderangeoffinancial products and product providers; or

(c) theAFA or a related personoftheAFAwillormaydirectlyorindirectlyreceiveabenefitfromapersonotherthantheclientforprovidingtheservicesorfromtheclient’sacquisitionofafinancial product orproducts.

However,forthepurposesofthisparagraph(c)thefollowingbenefits donotaffectanAFA’sabilitytodescribetheAFAortheAFA’sservicesasindependent:

– thosethatarepaid,credited,ortransferredtotheclient; and

– thosethatareremoteorinsignificant;and

– thosethatarereceivedbytheAFAintheformofsalaryorwagesasanemployee,orintheformoffeesasacontractor,thatarenotdeterminedinwholeorinpartbyreferencetovolumeorothertargetsrelatingtoaparticularfinancial product orproduct provider.

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AvIOUR

AnAFAmustnotstateorimplythataresearcherorotherthirdpartyserviceproviderusedbytheAFAinrelationtotheAFA’s financial adviser services isindependentunlesstheAFAhasreasonablegroundstobelievethethirdpartywouldbeabletodescribethemselvesasindependentunderthisCode Standard,ifthethirdpartywereanAFA.

code stAndArd 4

An Authorised Financial Adviser must not borrow from or lend to a retail client.

This Code Standarddoesnotapplyiftheclient is

(a)arelated personoftheAFA; or

(b)inthebusinessofborrowingorlendingmoneyorvaluablepropertyandtheAFA’sborrowingorlendingisintheordinarycourseoftheclient’s businessontermsconsistentwiththeclient’snormalbusinessterms.

ThisCode StandarddoesnotpreventanAFA or an AFA’semployerorprincipalfromenteringintofinancialarrangementsonbehalfofaclient astheclient’sagenttomeetsettlementobligationsinrelationtoany financial product.

AnAFAmustnotarrangefortheAFA’semployerorprincipaltoborrowfrom or lend to a retail client,otherthanintheordinarycourseoftheemployer’s or principal’sbusiness.

code stAndArd 5

An Authorised Financial Adviser must not provide financial advice to a retail client in relation to a financial product that is not offered to the public if the Authorised Financial Adviser is a related person of the product provider of that financial product.

ThisCode Standarddoesnotapply:

(a) iftheclient is a related personoftheAFA,orisarelated personoftheAFA’semployerorprincipal; or

(b) iftheAFAissatisfiedonreasonablegroundsthattheAFA’s financial adviceisappropriatefortheclientand,beforetheclientmakesadecisioninrelationtothe financial producttowhichthe financial advice relates,theAFAprovidestotheclient in writing:

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AvIOUR

(i) anexplanationoftheAFA’srelationshipwiththeproduct providerofthefinancial product,therisksofthe financial product,anddetailsofhowtheAFAmanagesanyconflictofinterestarisingasaresultofthatrelationship;and

(ii) arecommendationthattheclienttakesfinancial advicefromanotherAFAwhoisnotarelated person oftheproduct provider.

ThepurposeofthisCode Standardistoprotecttheinterestsofretail clients intheraresituationswherearetail clientmayhold,orlawfullybeoffered theopportunitytoacquire,afinancial productthatisnot offered to the public.Accordingly,thisCode Standardisverylimitedinitsapplication. It does not enable an AFAtoprovidefinancial advice to a retail client inrelationtotheacquisitionofafinancial productthatisnotableto belawfullyofferedtotheclient.

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CMINIMUM

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Minimum standards of client care

code stAndArd 6

Pg12 Behavingprofessionally

code stAndArd 7

Pg13 Ensuringretailclientsareabletomakeinformeddecisions

code stAndArd 8

Pg13 Suitabilityofpersonalisedservicesforretailclients

code stAndArd 9

Pg14 Explainingthebasisofpersonalisedservicesforretailclients

code stAndArd 10

Pg15 Providingclassservicesforretailclients

code stAndArd 11

Pg15 Complaintsprocesses

code stAndArd 12

Pg16 Keepinginformationaboutpersonalisedservicesforretailclients

code stAndArd 13

Pg17 Recordretention

D Minimum standards of client care

code stAndArd 6

An Authorised Financial Adviser must behave professionally in all dealings with a client, and communicate clearly, concisely, and effectively.

Whenproviding financial adviser services to a client,anAFAmust:

(a) provideonlyservicesthattheAFAhasthecompetence,knowledge,andskilltoprovide;and

(b) providetheservicesandperformtheAFA’sobligationsinatimelyway;and

(c) transparentlymanageanyconflictsofinterestthatmayariseinprovidingtheservices;and

(d) makerecommendationsonlyinrelationtofinancial productsthathavebeenanalysedbytheAFAtoalevelthatprovidesareasonablebasisforanysuchrecommendation,oranalysedbyanotherpersonuponwhoseanalysisitisreasonable,inallthecircumstances,fortheAFAtorely.

Communicating“effectively”forthepurposesofthisCode Standard requiresanAFAtotakereasonablestepstoensuretheclientunderstandsthecommunication.

Whentransmittingthefinancial advice ofanotherperson to a client,anAFA musttakereasonablecaretoensurethatthepersonprovidingthefinancial advicehasanappropriatelevelofcompetence,knowledge,andskilltoprovidethatadvice,andeither:

• ensuretheclientisawarethattheAFAhasnotpreparedthefinancialadviceorassesseditssuitabilityfortheclient; or

• accompanythefinancial advice withtheAFA’sown financial advice inrelationtothesamesubjectmatter(inwhichcasetheAFAmayhavefurtherobligationsunderCode Standards 8 and 9).

Whenprovidingfinancial adviser services to a wholesale client,anAFAmusttakereasonablestepstoensuretheclientisawarethattheclient is regarded as a wholesale client forthepurposesoftheActandtheCode,andalsoisawareoftheconsequencesofthatstatus.

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code stAndArd 7

An Authorised Financial Adviser must ensure each retail client has sufficient information to enable the client to make an informed decision about whether to use the Authorised Financial Adviser’s financial adviser services and/or to follow any financial advice provided by the Authorised Financial Adviser.

TheinformationanAFAmayberequiredtoprovidearetail client underthis Code Standardincludes(butisnotlimitedto)informationaboutanylimitsonthescopeoftheAFA’s financial adviser services,theAFA’squalificationstoprovidethoseservices,thefeestheclientmustpay,thebenefitstheAFAoranyrelated personoftheAFAwillormayreceive,andanyconflictsofinteresttheAFAmayhave,inrelationtotheAFA’s financial adviser services providedtotheclient.

InmanycircumstancesanAFAwillsatisfytherequirementsofthisCode Standard bycomplyingwiththeAFA’sdisclosureobligationsundertheAct.However,insomecircumstancesadditionalinformationmayneedtobeprovidedtoaretail clienttoensuretheclienthassufficientinformation tobeabletomakeaninformeddecision.

TheinformationrequiredunderthisCode StandardmustbeupdatedwhenthereisanychangeintheAFA’scircumstancesthatismaterialtothefinancial adviser servicesprovidedbytheAFAtotheclient.

code stAndArd 8

When providing a personalised service to a retail client an Authorised Financial Adviser must take reasonable steps to ensure that the personalised service is suitable for the client.

AnAFAisonlyrequiredtodeterminesuitabilityunderthisCode Standard basedontheinformationprovidedbytheclientandinformationotherwiseknowntotheAFA.However,anAFAmustmakereasonableenquiriestoensuretheAFAhasanup-to-dateunderstandingoftheclient’sfinancialsituation,financialneeds,financialgoals,andtoleranceforrisk,havingregardtothenatureofthepersonalised service beingprovided.

Whereaclient:

(a) declinestoprovidesomeoralloftheinformationrequiredunderthisCode Standard,anAFAmusttakereasonablestepstoensuretheclient isawarethatthepersonalised service islimitedandspecifythoselimitations;or

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(b) instructsanAFA(oranAFA’semployerorprincipal)nottodeterminethesuitabilityofthefinancial adviser service provided,theAFAisrelievedfromtheobligationtodeterminesuitabilitytotheextentprovidedforinthatinstruction.However,thisreliefisonlyavailableiftheinstructionisprovidedinadocumentthatissignedanddatedbytheclient,andthatincludesaclearacknowledgementfromtheclientastotheadvantagesoftheAFAdeterminingsuitabilitybasedontheprovisionofalltheinformationcontemplatedunderthisCode Standard.

AnAFAmustnotdirectorinfluenceaclienttoinstructtheAFA not to determinethesuitabilityofafinancial adviser servicetobeprovidedfortheclient,ordirectorinfluenceaclienttodeclinetoprovideanyoftheinformationcontemplatedunderthisCode Standard.However,thisrestrictiondoesnotpreventanAFA:

• drawingtheclient’sattentiontotheclient’sabilitytooptoutofhavingsuitabilitydeterminedascontemplatedunderthisCode Standard; or

• quotingorestimatingareasonablefeefordeterminingsuitabilityunderthisCode Standard.

Iftheextentofaninstructiongivenbyaclientunderparagraph(b)ofthisCode Standardissuchthatthe financial adviser serviceprovidedbytheAFA totheclientisnotorwillnolongerbeapersonalised service,theAFAwillthenneedtocomplywithCode Standard 10.

code stAndArd 9

Where an Authorised Financial Adviser provides a personalised service to a retail client that is an investment planning service or that relates to a category 1 product, the Authorised Financial Adviser must provide a written explanation to the client of the basis on which those services are provided. The Authorised Financial Adviser must also take reasonable steps to ensure the client is aware of the principal benefits and risks involved in following any financial advice provided as part of that service, having regard to the characteristics of the personalised service.

AllexplanationsrequiredunderthisCode Standard mustbeprovidedtotheclientatthetimethepersonalised serviceisprovidedorassoonaspracticableafterthattime.However,therequirementtoprovideanexplanationunderthisCode Standard doesnotapplywhere:

• theAFAhaspreviouslyprovidedtheclientwithanexplanationunderthisCode Standardthatissufficienttocoverthepersonalised serviceprovided;or

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• theclienthaseitherinstructedtheAFA(ortheAFA’semployerorprincipal)orconfirmedapriorinstructionthatanexplanationunder thisCode Standard isnotrequired.Anysuchinstructionorconfirmationneed not be in writing,butmustreflectanunambiguous,activeinstructionorconfirmationthatisrelevanttothepersonalised servicecurrentlybeingprovided.

TheextentofanyexplanationrequiredunderthisCode Standard is determinedbywhata retail clientwouldreasonablyrequireforthepurpose ofdecidingwhethertofollowanyadviceorguidanceprovidedbytheAFA.

AnAFAmustnotdirectorinfluenceaclienttodeclinetheexplanationcontemplatedunderthisCode Standard.However,thisrestrictiondoesnotpreventanAFAfrom:

• drawingtheclient’sattentiontotheclient’sabilitytooptoutofreceivingtheexplanationcontemplatedunderthisCode Standard; or

• quotingorestimatingareasonablefeeforprovidinganexplanationunderthisCode Standard.

code stAndArd 10

When providing a class service to a retail client, an Authorised Financial Adviser must take reasonable steps to ensure the client is aware of the limitations of the service provided.

code stAndArd 11

An Authorised Financial Adviser must ensure there is an appropriate internal process in place for resolving client complaints in relation to the Authorised Financial Adviser’s financial adviser services.

ThecomplaintresolutionprocessunderthisCode Standard mustensurethat:

(a) theclientis,assoonasreasonablypracticableaftermakingacomplaint,providedwithacknowledgementofthecomplaint,informationabouttheAFA’s internal complaints handling process,andhowtocomplaintotheSecuritiesCommissionandtoanyapplicableexternal dispute resolution scheme; and

(b) aregisteriskeptrecordingallcomplaints,andactiontakentowardsresolvingthosecomplaints.

ThecomplaintsresolutionprocessrequiredunderthisCode Standard is requiredinadditiontotheAFA’s external dispute resolution scheme(ifany).

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code stAndArd 12

An Authorised Financial Adviser must record in writing adequate information about any personalised services provided to a retail client.

TheinformationrequiredtoberecordedunderthisCode Standard in relation toeachretail client mustinclude:

(a) informationabout:

(i) any personalised serviceprovidedoranyfinancial product recommendedtotheclient; and

(ii) anyrequiredexplanation,andadviceastosuitability,giventotheclient in relation to a financial adviser service or financial product; and

(iii) theresultsofanyenquiryoranyoralconfirmationfromtheclient declininganexplanationorsuitabilityassessmentunderCode Standards 8 and 9; and

(b) copiesofallinformationanddocumentsprovidedtothe client in writing, orreceivedfromtheclient,inconnectionwiththeAFA’s personalised servicesincluding–

(i) anyinformationprovidedunderCode Standard 7; and

(ii) anyprovisionorconfirmationoffinancial advice; and

(iii) anyexplanationprovidedinaccordancewithCode Standard 9; and

(iv) anyinstructionsfromtheclientdecliningtoprovideinformationordeclininganexplanationunderCode Standards 8 or 9; and

(v) anyinstructionsfromtheclientdecliningoracknowledginganylimitationsofasuitabilityanalysisinaccordancewithCode Standard 8; and

(vi) detailsofanycomplaintreceivedinrelationtotheAFA’sservices.

AnAFAwhoisanemployeemaysatisfytheAFA’sobligationsunderthisCode StandardbytakingreasonablestepstoensurethatrelevantmeasurestakenbytheAFA’semployerareconsistentwiththemeasurescontemplatedunderthisCode Standard.

AnAFAmustcomplywithallobligationsunderthePrivacyAct1993.Withoutlimitation,thisincludesobligationsinrelationtotheuseanddisclosureofclients’ personalinformationandtheprotectionofthatinformationfrom lossandunauthorisedaccess,use,modification,ordisclosure.

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code stAndArd 13

An Authorised Financial Adviser must ensure that records of all information and documents required under this Code are kept for a minimum of 7 years.

The7-yearminimumperiodrequiredunderthisCode StandardgenerallycommencesonthelastdatethattheAFAprovidesafinancial adviser servicetotheclient.However,forinformationrelatingtoafinancial product transactionenteredintobytheclient,the7-yearminimumperiodforthatinformationcommencesonthedatethatallbenefitspotentiallyavailabletotheclientfromthefinancial producthavebeenrealised,ifthatdateisearlierthanthedatethatwouldotherwiseapply.

TherecordsrequiredunderthisCode Standard maybekeptinelectronicform,providedtherecordsarereadilyretrievable.

AnAFAwhoisanemployeemaysatisfytheAFA’sobligationsunderthisCode StandardbytakingreasonablestepstoensurethatrelevantmeasurestakenbytheAFA’semployer(ortheAFA’spreviousemployer,whereapplicable)areconsistentwiththemeasurescontemplatedunderthisCode Standard.

WhereanAFAtransferstheAFA’sfinancialadvisoryrelationshipwithaclient to anotherfinancial adviser,theAFAmaysatisfytheAFA’sobligationsunderthisCode Standard bytakingreasonablestepstoensurethattheotherfinancial adviserkeepstherecordscontemplatedunderthisCode Standard foratleastaslongastheAFAwouldotherwisehavebeenrequiredtokeepthem.

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Minimum standards of competence, knowledge, and skills

code stAndArd 14

Pg19 Overarchingcompetencerequirement

code stAndArd 15

Pg19 RequirementtohaveanadequateknowledgeofCode,Act,andlaws

code stAndArd 16

Pg20 NationalCertificateinFinancialServices(FinancialAdvice)(Level5)requirementandalternativequalifications

E Minimum standards of competence, knowledge, and skills required to provide financial adviser services

code stAndArd 14

Before providing a financial adviser service, an Authorised Financial Adviser must have the competence, knowledge, and skills to provide that service.

ThisCode Standard 14appliesinadditiontotherequirementsofCode Standards 15 and 16thatrelatetoparticularqualificationsanAFAmustattain.

AnAFAmustbeabletodemonstratethattheAFAhasareasonablebasisforbelievingthattheAFAhasthelevelofcompetence,knowledge,andskillsrequiredbythisCode Standard.

code stAndArd 15

An Authorised Financial Adviser must have a knowledge of the Act, the Code, and other legal obligations relevant to the operation of the Authorised Financial Adviser’s practice as a financial adviser (including relevant consumer protection laws), that is adequate for the proper operation of that practice.

AnAFAmustattainUnit Standard SetBandbeabletodemonstratetheadequacyoftheAFA’sknowledgeofrelevantlegislativeobligations.

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EMINIMUM

STANdARd

SOFCOM

PETENCE,KNOW

LEdgE,ANdSKILLS

code stAndArd 16

To be an Authorised Financial Adviser, a financial adviser must attain the Unit Standard Sets within the National Certificate in Financial Services (Financial Advice) (Level 5) that are relevant to the financial adviser services provided by the AFA.

For the purposes of the Code, an Authorised Financial Adviser is deemed to have attained a particular Unit Standard Set where the Authorised Financial Adviser has attained an alternative qualification or designation to that Unit Standard Set specified in the Code’s Competence Alternatives Schedule.

AnAFAwhohasattainedUnit Standard SetsA,B,C,anddoftheNationalCertificateinFinancialServices(FinancialAdvice)(Level5)isnotrestricted intherangeoffinancial adviser servicestheAFAcanprovideoroffertoprovide,subjecttoCode Standard 14andthetermsoftheAFA’s authorisationundertheAct.

However,providedtheAFAsatisfiesCode Standard 14 an AFA:

(a) mayprovideaclass serviceforanyclient,andanyformoffinancial adviser serviceforawholesale client,withouthavingattainedUnit Standard Set C or Unit Standard Setd;and

(b) mayprovideadiscretionary investment management servicefor a clientwithouthavingattainedUnit Standard Set C; and

(c) mayprovidefinancial adviser servicesforaclientwithouthavingattainedUnit Standard SetdiftheAFAhasattainedUnit Standard SetEandthefinancial productsthatmightbeincludedwithinthescopeofthefinancial adviser servicesprovidedfortheclientconcerneddonotincludeanycategory 1 products.

IfanAFAhasattainedUnit Standard SetdthisCode Standard does not also requiretheAFA to attain Unit Standard SetEinordertoprovidefinancial adviser servicesthatinvolvecategory 2 products,solongastheAFAsatisfiesCode Standard 14.ForthepurposesofthisCode Standard,anAFAwillbedeemedtohaveattainedUnit Standard Set EiftheAFAhaseitherpassedbothoftheresidentialpropertylendingunits(units26286and26287), ortheAFAhaspassedunit25644andatleastoneofunits25645,25646,or25647(beingunitsrelatingtoinsurance).

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Competence Alternatives Schedule

ForthepurposesoftheCompetence Alternatives Schedule:

• adesignationpreviouslyattainedthathasnotbeenretainedatthetimean AFAseeksauthorisationwillstillberecognizedforthepurposesoftheSchedule,providedtheAFAhascompletedatleast20hoursCPDinthe 12monthsimmediatelybeforefirstbecomingauthorised,includingatleast10hoursofstructuredtrainingasdescribedin Code Standard 18; and

• referencestoaqualificationpaperordesignationbeing“subjecttotheeligibility sunset”meantherelevantqualification,paper,ordesignationmustbefullyattainedatthetimetheAFAseeksauthorisationforthefirsttime,andthequalification,paper,ordesignationwillonlyberecognisedforauthorisationsthatcomeintoeffectpriorto1January2014.

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Minimum standards for continuing professional training

code stAndArd 17

Pg23 Professionaldevelopmentplanrequirement

code stAndArd 18

Pg23 Undertakingcontinuingprofessionaltraining

F Minimum standards for continuing professional training

FMINIMUM

STANdARd

SFORCO

NTINUINgPRO

FESSIONALTRAININg

code stAndArd 17

An Authorised Financial Adviser must maintain and keep current a professional development plan for each CPD period.

AnAFA’sprofessionaldevelopmentplanmust:

(a) identifyanyareasforimprovementintheAFA’scompetence,knowledge,andskillsinrelationtothefinancial adviser servicesheorsheprovidesorintendstoprovide;

(b) includetheAFA’sproposalsformakingthoseimprovements;and

(c) whereavailable,includedetailsofcourses,seminars,workshops,andanyothertrainingorprofessionaldevelopmentplannedtobeundertaken.

code stAndArd 18

An Authorised Financial Adviser must undertake sufficient continuing professional training to maintain the Authorised Financial Adviser’s competence at a level appropriate for the financial adviser services the Authorised Financial Adviser provides or intends to provide, and keep up to date with developments relevant to the Authorised Financial Adviser’s practice.

AnAFAmustineach CPD periodcompleteaminimumof20hours ofprofessionaldevelopmentrelevanttothefinancial adviser services theAFAprovidesorintendstoprovide.

Thatprofessionaldevelopmentmust,ineachCPD period,comprise atleast10hoursofstructuredtraining.

Tobestructuredtraining,thetrainingmustformpartoftherequirements foraqualificationoneithertheNationalQualificationsFrameworkorthenationalregisterofqualityassuredqualifications,orbepartofastructuredcontinuingprofessionaldevelopmentprogrammemanagedbyaDAO, QFE, or professional body.

23

AnAFAmustkeepappropriaterecordsofanyCPDactivitycompletedthatisrequiredbythisCode StandardinaformsuitablefordemonstratingcompliancewiththisCode Standard.Therecordscontemplatedunder thisCode Standardinclude:

(a) thenameoftheCPDactivity;and

(b) thedateofcompletion;and

(c) howmanyhoursofCPDitinvolved;and

(d) abriefdescriptionoftheCPDcontentcoveredbyit;and

(e) whetheritconstitutedstructuredtraining;and

(f) inrelationtostructuredtraining,relevantthird-partyverification ofthesuccessfulcompletionofthattraining,suchasconfirmation bythetrainingproviderorbytheAFA’semployerorprincipal.

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FMINIMUM

STANdARd

SFORCO

NTINUINgPRO

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G Competence Alternatives Schedule

ForthepurposesoftheCode,apersonwishingtobeanAFA is treated as havingsatisfiedtherequirementsofaparticularUnit Standard SetwherethepersonhasattainedanalternativequalificationordesignationasspecifiedinthisSchedule.

ReferencesinthisScheduletoaqualification,paper,ordesignationbeing“attained”or“subjecttotheeligibility sunset”areexplainedunderthe“CompetenceAlternativesSchedule”headinginCode Standard 16.

ALTerNATive quALiFiCATioN ALTerNATive deSigNATioN

National Certificate in Financial Services (Financial Advice) (Level 5)

Unit Standard Sets

ForthepurposesoftheCode, a personwhohasattainedone ofthefollowingqualificationsistreatedashavingsatisfiedtherequirementsofthespecified Unit Standard Set

ForthepurposesoftheCode, a personwhohasattainedone ofthefollowingdesignationsistreatedashavingsatisfiedtherequirementsofthespecified Unit Standard Set

Unit Standard Set A

(Comprisingunits 24755,25642, and25643)

Knowledgeoftheindustry,financialmarkets,theadviceprocessandproducts

• AnyNewZealand-issuedtertiaryqualificationatdegreeleveloraboveinormajoringinaccountancy,business(includingbusinessadministrationandbusinessanalysis),commerce,economics,finance,ormanagementstudies(includingappliedmanagement)

• graduatediplomainBusinessStudies(PersonalFinancialPlanning)(MasseyUniversity)*

• graduatediplomainBusinessStudies(PersonalRiskManagement)(MasseyUniversity)*

• Postgraduatediplomain PersonalFinancialPlanning(WaikatoUniversity)*

• CertificateinFinancialServicesfromAdviserlinkLearningLimited

• NewZealandStockExchangediploma(NZSEdiploma)

• NZXdiploma

• Associate Financial Planner

• Associate Life Underwriter

• Certified Financial Planner

• CFA Charterholders

• Chartered Life Underwriter

• MemberoftheNewZealandInstituteofCharteredAccountants (Accounting Technician, Associate Chartered Accountant, and Chartered Accountant)

• NZFMA Accredited individual

• NZX Advisor

• NZX Associate Advisor

• Registered Legal Executive

* ineachcase,includingtheirrespectivepredecessordiplomaqualifications

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Unit Standard Sets



Unit Standard Set B

(Comprisingunit26360)

Knowledgeofthe Codeandconsumerprotectionlaws

Norecognisedalternative Norecognisedalternative

Unit Standard Set C

(Comprisingunits 25650,25651, 25652,and25653)

Professionalpracticeadviceprocessandcomplyingwithlegislation

• CertificateinFinancialServicesfromAdviserlinkLearningLimited,attainedpriorto1January2010

• Associate Chartered Accountant

• Chartered Accountant

• Certified Financial Planner

• CFA Charterholder

• Chartered Life Underwriter

• NZX Advisor

ineachcasesubjecttothe eligibility sunset

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Unit Standard Sets



Unit Standard Set d

(Comprisingunits 25648and25649)

Investment Unit Standards

• graduatediplomainBusinessStudies(PersonalFinancialPlanning)(MasseyUniversity)*,subjecttotheeligibility sunset

• PostgraduatediplomainPersonalFinancialPlanning(WaikatoUniversity)*,subjecttotheeligibility sunset

• NewZealandStockExchangediploma(NZSEdiploma)

• NZXdiploma,subjecttotheeligibility sunset

• CFA Charterholder


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Unit Standard Sets



Unit Standard Set e

(Comprisingeither units 25644 and 25645,orunits 25646and25647)

Insurance Unit Standards

OR

ResidentialPropertyLendingUnitStandards

• graduatediplomainBusinessStudies(PersonalRiskManagementORPersonalFinancialPlanning)(MasseyUniversity)*,providedthe diplomaincludesapaperonpersonalriskmanagement,subjecttotheeligibility sunset

• Associate Life Underwriter or Chartered Life Underwriter whohascompletedfourpapersfromthegraduatediplomainBusinessStudies(PersonalRiskManagement)(MasseyUniversity)*includingapaperonpersonalriskmanagement,subjecttotheeligibility sunset

• Associate Financial Planner or Certified Financial PlannerwhohascompletedfourpapersfromthegraduatediplomainBusinessStudies(PersonalFinancialPlanning)(MasseyUniversity)*includingapaperonpersonal riskmanagement,subjectto theeligibility sunset

• Chartered Life Underwriterwho,priorto1January2010,hasattainedtheNewZealanddiplomainLifeAssurance,theNewZealandCertificateinLifeInsurance(OpenPolytechnic),anAssociateshipoftheInsuranceInstituteofNewZealand(Life),orhascompletedthepersonalriskmanagementcourseprovidedbyAdviserlinkLearningLimited


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Definitions schedule

H Definitions schedule

InthisCode,unlessthecontextotherwiserequires,thefollowingtermshavethemeaningssetoutbelow.Toassist,thosetermsareshowninitalics wherevertheyappearinthebodyoftheCode.Anytermthatisnotdefined inthisSchedule,butisdefinedintheActorinregulationsmadeundertheAct,hasthesamemeaningintheCodeasintheActorinthoseregulations,asapplicable.

Accounting Technician

amemberoftheNewZealandInstituteofCharteredAccountantswho,undertherulesoftheInstitute,isentitledtousethedesignationaccountingtechnician

Act theFinancialAdvisersAct2008

AFA an Authorised Financial Adviser

Associate Chartered Accountant

amemberoftheNewZealandInstituteofCharteredAccountantswho,undertherulesoftheInstitute, isentitledtousethedesignationAssociateCharteredAccountant

Associate Financial Planner

anindividualwhohasbeenawardedthisdesignationbytheInstituteofFinancialAdvisersInc

Associate Life underwriter

anindividualwhohasbeenawardedthisdesignationbytheInstituteofFinancialAdvisersInc

Authorised Financial Adviser

a persondescribedinsection51oftheActwhoisauthorisedbytheSecuritiesCommissionundersection55oftheAct

Bank hasthesamemeaningastheterm“bankin NewZealand”insection5oftheAct

benefit anymoney,property,orothervaluableconsideration

business partner a personwhoisamemberofapartnershipasdefinedinsection4ofthePartnershipAct1908

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category 1 product meansanyofthefollowingproducts(otherthanaproductthatisacategory2product):

(a) a security; or

(b) alandinvestmentproduct(asdefinedbyregulations);or

(c) afuturescontract;or

(d) aninvestment-linkedcontractofinsurance(asdefinedbyregulations);or

(e) anyotherproductspecifiedbyregulationsmadeundertheAct; or

(f) arenewalorvariationofthetermsorconditionsofanexistingcategory 1 product

category 2 product meansanyofthefollowingproducts:

(a) abanktermdeposit;or

(b) anybonusbond;or

(c) anycallbuildingsocietyshare;or

(d) acallcreditunionshare;or

(e) acalldebtsecurity;or

(f) ashareinaco-operativecompany(asdefinedinsection2(1)oftheCo-operativeCompaniesAct1996);or

(g) aunitinacashortermportfolioinvestmententity(asdefinedbyregulations);or

(h) aconsumercreditcontractwithinthemeaningoftheCreditContractsandConsumerFinanceAct2003;or

(i) acontractofinsurance(otherthananinvestment-linkedcontractofinsurance);or

(j) alifeinsurancepolicy(withinthemeaningofsection2(1)oftheSecuritiesAct1978)issuedbefore1January2009;or

(k) anyotherproductspecifiedbyregulationsmadeundertheAct; or

(l) arenewalorvariationofthetermsandconditionsofanyexisting category 2 product

Certified Financial Planner

anindividualwhohasbeenawardedthisdesignationbytheInstituteofFinancialAdvisersInc.

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CFA Charterholder anindividualentitledtousethecharteredfinancialanalystdesignationgrantedbytheCFAInstitute

Chartered Accountant

hasthesamemeaningasinsection2oftheNewZealandInstituteofCharteredAccountantsAct1996

Chartered Life underwriter

meansanindividualwhohasbeenawardedthisdesignationbytheInstituteofFinancialAdvisersInc.

class service a financial adviser servicethatisnota personalised service

client means,inrelationtoanAFA,–

(a) apersonwhoreceivesaservicefromtheAFA (whetherornotonpaymentofacharge);but

(b) doesnotincludeapersonwhoreceivesanyservicesfromtheAFAiftheserviceisbothprovidedandreceivedinthecourseof,andforthepurposesof:

(i) thesamebusiness;or

(ii) thebusinessesofrelatedbodiescorporate;or

(iii) thebusinessesofmembersofaQFEgroup,

irrespectiveofwhetherthepersonprovidingorreceivingtheserviceisthepersoncarryingonthebusiness,acontrollingowner,adirector,anagent,oranyotherperson

client information informationaboutaclient

Code theCodeofProfessionalConductforAuthorisedFinancialAdvisersapprovedbytheMinister andbroughtintoforcebyGazettenoticeundersection94oftheAct

Code Standard astandardspecifiedintheCode

Commissioner for Financial Advisers and Commissioner

thepersonappointedundersection79(3)oftheAct


thescheduleofthisCodenamedassuch

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complaint anexpressionofdissatisfactionbyaclient to an AFA abouttheAFA’s financial adviser servicesprovidedtotheclient,otherthananexpressionofdissatisfactionthatistrivialorvexatiousorthattheclient indicates isnotintendedtoconstituteacomplaintforthepurposesoftheCode

CPd continuingprofessionaldevelopmentortrainingrelevanttothe financial adviser servicestheAFA providesorintendstoprovide

CPd period inrespectofanAFA,a12-monthperiodfromthedayoftheyearspecifiedforthispurposeintheAFA’s termsofauthorisationor,intheabsenceofanysuchdaybeingspecified,acalendaryearwiththefirstsuchperiodcommencingonthe1stdayofJanuaryfollowingtheAFA’sauthorisation

dAo anentityregisteredbyETITO as a delegated assessmentorganisationaccreditedfortheprovisionoftrainingandassessmentforUnit Standard Set C

director hasthemeaninggivenbysection126oftheCompaniesAct1993,butalsoincludes,inrelation toabodythatisnotacompany,apersonwhooccupiesapositioncomparabletothatofa director(suchasatrusteeorapartner)

discretionary investment management service

aservicewhichanAFA,actingunderanauthoritygrantedtotheAFA(ortotheAFA’semployerorprincipal)managesallorsomeoftheclient’s holdingsoffinancial product,anddecideswhichfinancial productstoacquireordisposeofon behalfoftheclient

eligibility sunset partofthetransitionalmeasuresexplainedatCode Standard 16underthe“CompetenceAlternativesSchedule”heading

eTiTo ElectrotechnologyIndustryTrainingOrganisationIncorporated

external dispute resolution scheme

inrespectofanAFA,theschemeundersection48oftheFinancialServiceProviders(RegistrationanddisputeResolution)Act2008towhichanycomplaintconcerningtheAFAmustbereferred

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financial advice makingarecommendationorgivinganopinioninrelationtoacquiringordisposingof(includingrefrainingfromacquiringordisposingof)afinancial product,notingthatwhetherornotadviceisfinancialadviceisnotaffectedbyhowtheadvice isgivenorcommunicated.

Themereprovisionofinformationormaking arecommendationorgivinganopinionrelatingtoaclassoffinancial products,ormakingarecommendationorgivinganopinionabout theprocedureforacquiringordisposingofafinancial product,ortransmittingthefinancial adviceofanotherorrecommendingthata personconsultafinancial adviser,doesnot amounttofinancial advice

financial adviser a personwhoprovidesafinancial adviser service

financial adviser service

givingfinancial advice,orprovidingan investment planning service,orprovidingadiscretionary investment management service,intheordinarycourseofbusiness

financial product a category 1 product or a category 2 product

internal complaints handling process

an AFA’sinternalprocessforhandlingandresolvingcomplaints as described in Code Standard 11

investment planning service

aserviceprovidedbyanAFAunderwhichthe AFAdesigns,orofferstodesign,aplanforanindividualthat:

(a) isbasedon,orpurportstobebasedon,ananalysisoftheindividual’scurrentandfutureoverallfinancialsituation(whichmustinclude hisorherinvestmentneeds)andidentification oftheindividual’sinvestmentgoals;and

(b) includes1ormorerecommendations oropinionsonhowtorealisethosegoals (or1ormoreofthem),

regardlessofwhethertheanalysisandidentificationisoftheindividual’sparticularfinancialsituationandgoalsorofthefinancialsituationsandgoalsattributabletoaclassofpersonsthattheindividualisidentifiedascomingwithin

Minister hasthesamemeaningasinsection5oftheAct

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NZFMA Accredited individual

anindividualwhohasachievedaccreditedindividualstatusfollowingthecompletionoftheNewZealandFinancialMarketsAssociationFinancialServicesAccreditationProgram

NZX Advisor and NZX Associate Advisor

anindividualwhohasbeenaccreditedand approvedbyNZXasanNZXAdvisororNZX AssociateAdvisor(asapplicable)asprovided intheNZXParticipantRules

offered to the public in relation to a security,hasthesamemeaningastheconstructionofreferencestoofferingsecuritiestothepublicinsection3oftheSecuritiesAct1978;

andinrelationtoanyotherfinancial product meansthefinancial productisbeingorhasbeenofferedto:

(a) anysectionofthepublic,howeverselected;or

(b) individualmembersofthepublicselectedatrandom;or

(c) apersonifthepersonbecameknowntotheofferorasaresultofanypublicadvertisingof theofferorthatwasintendedtolikelytoresult inthepublicseekingfurtherinformationaboutthefinancial product

person includesanindividual,acorporationsole,abodycorporate,andanunincorporatedbody(includingthetrusteesofatrust)

personalised service a financial adviser service:

(a) giventoorinrespectofanamedclient or a clientthatisotherwisereadilyidentifiable bytheAFA; and

(b) theAFAhastakenintoaccounttheclient’s particularfinancialsituationorgoals(orany oneormoreofthem)inprovidingtheservice, ortheclientwould,inthecircumstancesin whichtheserviceisprovided,reasonablyexpecttheAFAtotakeintoaccounttheclient’s particularfinancialsituationorgoals(oroneoranymoreofthem),

however,aserviceisnotpersonalisedmerelybecausetheclientcomeswithinaclassofpersons havingpredefinedcharacteristicsandtheAFA takesthefactthattheclientcomeswithinthat classintoaccount

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principal a personwhoistheprincipal in an agencyrelationship

product provider means:

(a) theissuer,inthecaseofasecurity:

(b) thecreditor,inthecaseofaconsumercreditcontract(withinthemeaningoftheCreditContractsandConsumerFinanceAct2003):

(c) theinsurer,inthecaseofacontractof insurance(otherthananinvestment-linkedcontractofinsurance):

(d) thepersonspecifiedbyregulationsinany othercase

professional body amembership-basedorganisationwhoseprincipalactivitiesareassociatedwiththefinancialservicesindustryinNewZealandwhereongoingmembershiprequirescompliancewithcontinuingprofessionaldevelopmentortrainingrequirementsspecified bytheorganisation

qFe anentitythatisregisteredandhasQFEstatusoranumberofpartnerentitiesthatareeachregisteredandjointlyhaveQFEstatus

registered Legal executive

anindividualwhoisentitled,undertheRulesoftheNewZealandInstituteofLegalExecutivesInc,tousethedesignationregisteredlegalexecutive

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related person (a) inrelationtoanindividual,aparent,child,sibling,spouse,defactospouse,civilunionpartner,employer,orbusiness partnerofthatindividual,oraprincipalonwhosebehalftheindividualprovidesfinancial adviser services bywayofacontractforservices;and

(b) inrelationtoabodycorporateA:

(i) apersonwho

• isalsoabodycorporate;and

• eitherhassubstantiallythesameshareholdersasA;or

• isunderthecontrolofthesameperson or personsasA;or

(ii) apersonwhoisable,directlyorindirectly,to–

• exercise,orcontroltheexercise,of25%ormoreofthevotingatameetingoftheshareholdersofA;or

• appointorcontrol25%ormoreofagoverningbodyofA

retail client a clientwhoisnotawholesale client

security hasthesamemeaningasinsection5oftheAct

unit aunitstandardformingpartoftheNationalCertificateinFinancialServices(FinancialAdvice)(Level5)ontheNationalQualificationsFramework

unit Standard Set asetofunitsspecifiedintheNationalCertificateinFinancialServices(FinancialAdvice)Level5, withUnitStandardSetsA,B,C,dandE comprisingtherespectiveunitsspecified intheCompetenceSchedule

wholesale client a clientclassifiedasawholesale clientundersection5CoftheAct

written or in writing includesinelectronicform.

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