What does good conduct look like
A number of financial advisers are questioning why the new adviser regulatory regime has a focus on licensing and good conduct. The question we often hear is “What does good conduct mean?” A good first step would be to read ‘A guide to the FMA’s view of conduct‘ (February 2017).
If you want a shorter more direct reason as to why you should take good conduct seriously and implement the right policies, processes and controls into your business, then read Rob Everett’s (FMA CEO) hard-hitting statement below.
Everett asks the question: What does good conduct look like – rather than us imposing it on you?
It seems no one has really defined good conduct at a practical level, and that may well be because it is too hard to prescribe.
However, Everett has some views:
"Poor conduct and poor treatment of customers is most often about sloppiness – lack of process, lack of training, poor systems, etc. It is relatively rarely, at least in licensed and regulated financial services, about deliberate wrong-doing.
Obviously, where it is or we suspect it is, we’ll go after it and so will other regulators.
But poor processes, product design, complaint-handling, incentive structures – all of these are culpable.
Reckless or lazy disregard for the needs and interests of customers and investors is not acceptable. It’s why we talk about governance, culture and controls.
It’s why we have recommended to the Government that the new conduct legislation allows us to look for these things and to force providers to improve them – including in cases where we cannot see or prove the harm to investors or customers has already happened."
(Rob Everett FMA CEO)