Morosidad y mecanismos de pago a proveedores

Twenty-two submitters expressed support for the seven client care principles and stated that these principles would establish a solid basis from which to improve the level of client care.

One submitter suggested the following client care (and ethical) principles instead, suggesting that the Code should be framed as a set of principles supplemented with guidance notes: tailoring to the consumer; consumer interest; compliance; remuneration; professionalism; objectivity; competence; continuing professional development; responsibility for actions; conflicts of interest; scope of service; and suitability of service.

One submitter invited the Code Committee to view the standards on www.cluinstitute.ca which provide a perspective on risk and insurance advisers.

Another submitter suggested that suitability and effective dispute resolution were the key principles, and that the rest were too vague.

One submitter largely agreed, although it was noted that the last two were not so much principles as “headings for sets of prescriptive requirements.”

One submitter stated that it could be argued that some of the terms are not really principles but nevertheless strongly supported the sentiment behind them. It was submitted that quality performance (ie performing work with due care and diligence to the best of their ability and in a timely manner), professional behaviour (ie respecting the confidentiality of information acquired and conducting oneself in a courteous and considerate manner) should be the minimum standards expected of an AFA.

Another submitter agreed that the principles are appropriate but suggested that these should not be complicated so that the client can easily understand them.

Another submitter agreed that the client care principles are appropriate. It was submitted that there needs to be clear definitions but that the client care principles must not be too onerous for the client or adviser.

Implementation

One submitter stated that the principles are fair and seem obvious. However that submitter was concerned with how the principles will be measured. She queried whether there will be exact definitions for these principles and she expressed concern about how this will be measured to achieve the desired outcome.

Three submitters stated that they have no issue with the principles but have concerns regarding how AFAs will be measured against these. For example “communication” which requires that all financial advice and recommendations must be communicated in writing would be inappropriate in some circumstances and would also add unnecessarily to the cost of compliance.

One submitter stated that in principle the client care principles are ones which they expect their advisers to adhere to. However the extent to which the AFAs are required to abide by these principles depends on the needs of the particular client.

That submitter suggested that client care principles need to be client focussed and not focussed on the organisation of the adviser or the adviser themselves. They stated that all AFAs should be guided by the principles but the extent to which they have mandatory minimum standards to follow should depend on the needs of the particular client: eg the reliance of “retail” clients receiving a financial planning service is higher than “wholesale” clients receiving financial advice.

One submitter agreed that the principles are appropriate but argue that they should not be applied to lawyers.

One submitter agreed that the principles are appropriate but that NZX Advisors are already subject to similar standards under the NZX Rules. It was submitted that NZX Advisors are required at all times to act with due care, diligence and efficiency and operate under a dispute resolution scheme

operated by the NZX (NZX Rules 8.1.1(a) and 17.2). It was submitted that when providing advice to clients, NZX members are required to maintain the standards of objectivity and professionalism at all times (rule 9.1(c)). Therefore it was stated that the standards are unnecessary.

Professionalism

One submitter stated that professionalism should be a priority at all times.

Another submitter suggested that in setting the standards of professionalism regard should be had to the circumstances and the service/s being offered to avoid imposing unrealistic obligations.

One submitter stated that professionalism can be defined as adherence to ethical behaviour principles. It was submitted that this should include the obligation to be well-informed about a wide range of products and services.

Suitability

One submitter stated that the intent of the suitability provision is accepted and appropriate. However it was stated that it is not totally clear what is expected by a suitability analysis or at what stage the suitability analysis should be used. It was submitted that “suitability” means testing whether a recommendation given is a good recommendation. It was submitted that proposed standard 11 suggests that this analysis must be done “before providing any financial adviser services” which is illogical and unworkable. It was also stated that prior to engaging with the client and conducting data gathering and then analysis it is not possible to determine what advice or product may be chosen. Therefore the suitability analysis cannot be undertaken until the adviser is nearly two thirds through a comprehensive advice process.

One submitter suggested that the suitability requirement be limited to the information available to the AFA and the scope of the activity for which they have been retained.

Another submitter stressed that the suitability issue needed to be adequately addressed at the outset, and argued that doing so can pre-empt misunderstandings later on.

One submitter stated that while the suitability standards may be appropriate for investment advisers, the suitability standards will be of great concern to both the life and general insurance sectors and to other non-investment areas too.

One submitter preferred the concept of “competence” to “suitability.”

One submitter stated that a needs analysis approach is recommended and that a client could waive this approach if it is explained to the client.

One submitter argued that in assessing suitability the position (and sometimes vulnerability) of older people needs to be considered.

Another submitter referred to PAA’s Code of Ethics (canons 1 and 2) on client “advocacy” and “diligence”:

Advocacy – Endeavour to provide advice and service which are in the client’s best interest Rules:

1.1 A member possessing a specific body of knowledge which is not possessed by the general public has an obligation to use that knowledge for the benefit of the client and to avoid taking advantage of that knowledge to the detriment of the client. 1.2 In a conflict of interest situation, the interest of the client must be paramount. Diligence – Provide ongoing professional advice and service to clients

Rules

2.1 The member must make a conscious effort to ascertain and understand all relevant circumstances surrounding the client.

2.2 Advice and service is to be competent and ongoing to best match the client’s changing circumstances.

2.3 Remain informed of economic and legislative changes which relate to the client- member relationship.

2.4 In the making of oral or written recommendations to clients, a member shall: • distinguish clearly between fact and opinion.

• Base recommendations on sound professional evaluation of the client’s needs; and

• Support recommendations with appropriate research and adequate documentation of the facts.

One submitter suggested that the requirement for a suitability analysis is inappropriate for the share broking business, and would be likely to annoy customers who demanded particular financial products and were told by their share broker that a costly suitability analysis would have to be undertaken first. This would be particularly true of sophisticated investors who simply used AFAs to undertake the transactions themselves.