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Brief Counsel

Proposed continuing professional development for AFAs

11 February 2010

The Code Committee’s third consultation paper outlines the proposed minimum requirements of continuing professional training (CPT) for Authorised Financial Advisers (AFAs). 

The Committee suggests that AFAs complete a minimum of 20 hours of CPT every 12 months.  This seems comparatively high, being equal to the hours required of medical doctors and it's much more prescriptive than the on-going professional development obligations placed on lawyers.  However, it is only half of the hours required of a Chartered Accountant. 

It is proposed that the 20 CPT hours comprise a minimum of 12 hours of structured learning.  Structured learning is any training relevant to the provision of financial adviser services that:

  • forms part of a tertiary qualification, or

  • forms part of an NQF registered training programme, or

  • is provided by any recognised financial services industry body or professional organisation.

It also includes tertiary level lecturing or presentations and membership of a technical committee, governing body or taskforce of a recognised financial services industry body.  However, unlike the equivalent requirement for accountants, structured learning does not include publishing professional or academic papers, articles and research, or in-house training and presentations.

The remaining eight CPT hours can be either structured or unstructured learning.  Unstructured learning is any other training relevant to the provision of financial adviser services, including any informal training such as self-led reading and research, participation in product launches and presentations, adviser mentoring/training and publishing papers and articles. The Committee also suggested several compulsory areas of learning requiring a minimum of two hours CPT per year, namely:

  • regulations and legislation relevant to the provision of financial adviser services

  • specialist financial advice and product knowledge relating to the adviser’s specialist area (with a higher suggested minimum of five hours CPT per year)

  • ethics and professional conduct training

  • financial adviser business practices, processes and governance

  • client-focused professional skills (compulsory only for retail AFAs), and

  • training on the current financial market environment (mandatory only for investment advisers).

It is proposed that each AFA will develop, document and regularly review a professional development plan, including a training log, for each CPT year. 

The Committee has reiterated that it is likely it will review the standards in the Code including the CPT requirement from time to time, and particularly after it has seen the Code working in practice.

The Committee has recommended that the CPT requirements apply to all AFAs, including those who only make investment transactions, although it acknowledges that this may change when the Ministry of Economic Development completes its targeted consultation on the regulation of investment transactions. 

A copy of the consultation paper is available here.

For further advice, please contact any of the lawyers featured. 

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