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<\/p>\nThe new Financial Advice Code comes into effect on 1 November 2025, but veteran adviser and Certified Financial Planner Nigel Tate says its updates don\u2019t go nearly far enough. <\/p>\n
Wednesday, September 17th 2025, 3:30AM <\/p>\n
by Ksenia Stepanova<\/p>\n
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He says the current minimum qualification leaves too much room for poor advice and puts consumers at risk.<\/p>\n
The revised Code keeps Level 5 as the baseline for all advisers. It also tweaks the rules around continuing professional development (CPD), asking advisers to plan and record learning that\u2019s relevant to their practice. Tate says the issue is that it\u2019s largely self-determined, and a casual chat about a sale could be recorded as CPD under these guidelines.<\/p>\n
He also says we need Level 7 as a standard outside of areas like basic car insurance.<\/p>\n
\u201cI don\u2019t believe that Level 5 is high enough on any of the elements, but particularly when you start to integrate a group – retirement, risk and investment management, for example,\u201d Tate tells Good Returns.<\/p>\n
\u201cThat\u2019s when you\u2019re getting into financial planning, and the implications of that are far greater than if you\u2019re just getting someone\u2019s mortgage rate wrong.\u201d<\/p>\n
Tate proposed higher qualification standards at a consultation with FANZ, but got the impression that its proposals were already decided. Other advisers advocated for higher standards to the Code Committee, but it was \u2018unconvinced\u2019 that a higher bar would result in better outcomes.<\/p>\n
Tate also notes that areas like insurance or KiwiSaver advice are treated as \u2018not complex\u2019 for the purposes of regulation – however, the cost of making mistakes is huge. Something as simple as a default KiwiSaver fund at an early age could mean hundreds of thousands of dollars missed out on come retirement.<\/p>\n
Notably, insurance disputes through IFSO were at a record high this year.<\/p>\n
\u201cI would much rather have the fence at the top of the mountain than have an ambulance at the bottom,\u201d Tate said.<\/p>\n
\u201cWe need to move progressively to Level 7 and give practitioners plenty of time to get there. For nominated representatives in one area, the baseline should be Level 5, and they should stick within their lane. But anybody that wants to give financial advice should be going through to Level 7 in the next five years.\u201d<\/p>\n
The pitfalls of self-determined CPD<\/p>\n
The revised Code\u2019s approach to CPD is non-prescriptive and doesn\u2019t set any hard minimums.\u00a0 It also recognises \u2018informal\u2019 learning including reading or self-directed study.<\/p>\n
Tate says this lack of a concrete definition is essentially \u201cthe equivalent of getting credits for picking up rubbish at school.\u201d He also noted that New Zealand has the lowest bar for advisers in the OECD, with Australia, most of Asia and the US requiring a bachelor\u2019s degree.<\/p>\n
\u201cYou make up your own CPD, you decide whether or not it\u2019s actually CPD based on what you want it to achieve for you,\u201d he says.<\/p>\n
\u201cI know they\u2019re trying to be as non-prescriptive as possible, but we\u2019re human beings. Most of us will follow rules if we\u2019re told what they are. And if the regulator is going to be prescriptive at complaint time, let\u2019s be prescriptive beforehand.\u201d<\/p>\n
Tate says that regulators should be going to professional bodies and getting specialist input when deciding standards. This could mean sitting down with Certified Financial Planners or chartered life underwriters.<\/p>\n
\u201cAt the end of the day, turkeys don\u2019t vote for Christmas,\u201d he said. \u201cIf you ask the people who are most adversely affected by the raising of education standards, you\u2019ll likely get a negative response. Those who aren\u2019t adversely affected have gotten ahead of the game.\u201d<\/p>\n