New Rules for Financial Advisers

Monday, November 1st, 2010

Financial Advisers

Over the next few months, all financial advisers throughout the country will be preparing themselves for the new regulatory regime which will come into force following the introduction of the Financial Advisers Act. The purpose of this Act is ‘to promote the sound and efficient delivery of financial adviser and broking services, and to encourage public confidence in the professionalism and integrity of financial advisers and brokers’. By March 2011, all financial advisers will need to be registered, which in turn will require them to join an independent dispute resolution service. Disgruntled clients will then have access to a free service through which to complain and seek redress for poor advice. This process involves mediation with trained facilitators who can assist the parties reach agreement on how the complaint can be resolved. Advisers will be required to inform clients of their procedure for handling complaints and the name of the dispute resolution service they have subscribed to.

By 1 July 2011, all financial advisers providing advice on investment products will need to be authorised as well as registered. For authorisation, they will need to comply with the Code of Professional Conduct for Authorised Financial Advisers which amongst other key principles sets out the required levels of competency for advisers. Many advisers will be sitting exams and undertaking assessments in order to reach these levels. The effort and expense required for authorisation is likely to see some advisers leave the profession through retirement or selling their businesses. In some cases, such people have been advising for many years and while it is sad to see the loss of those who have learned on the job and provided good service to their clients, change is needed to move the sales oriented financial advice industry to being a client oriented financial advice profession.

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