Adviser regulation ready to 'go-live' on 1 December

The last formal step required for the introduction of the new financial advisers' regulatory regime has been taken, and the Code of Professional Conduct for Authorised Financial Advisers (AFAs) came into effect on 1 December.

The Code of Professional Conduct establishes 18 standards to ensure all authorised financial advisers meet the minimum standards for ethical behaviour, client care, knowledge, skills and competence, and continuing professional development.

This means that, from 1 December, all financial advisers, whether authorised or not, must comply with the care, diligence and skill provisions of the Financial Advisers Act.

If a financial adviser wants to provide any services that are reserved for AFAs under the Financial Advisers Act, the adviser will have to be authorised to do so by 1 July 2011 (unless the adviser works for a qualified financial entity). After that date, it will be an offence to provide personalised advice on category 1 products, or provide discretionary investment management services or investment planning services, unless the adviser is authorised.

Previously, the Securities Commission has stated that, provided advisers apply for authorisation by 31 March 2011, the Commission should be able to complete the authorisation process for AFAs by the critical date of 1 July 2011. However, the Commissioner for Financial Advisers says that this was based on the assumption that significant numbers would be already processed before 31 March. Unless there is more engagement now, Mr Mayhew warns that "there may be insufficient capacity in the system to cope with the volume of applications to be processed in the last three months before the regime is fully in force".

Click here to read the full press release.

Click here to view a copy of the Code.

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