Page 93 - Profile's Unit Trusts & Collective Investments - March 2025

Legislation and Guidelines

In relation to the code of conduct, financial advisers should take note that COFI, once law, will
control the conduct of advisers and regulate intermediary businesses.
Complaints Procedures
As noted above, Section 17 of the General Code of Conduct requires the establishment of a
complaints management framework. The provisions of Section 17 became effective in stages, but
all provisions had to be implemented by the end of June 2021.
Under Section 17, FSPs are required to appoint responsible persons to handle complaints and there
has to be a clearly defined internal escalation and review process. This has to be documented.
Each FSP must keep a record of complaints and monitor complaints received in order to
identify possible ongoing and recurring issues, to improve risk management and improve
outcomes for clients. Complaints must be categorised into defined categories. These include:
complaints relating to the design of a product or financial service, including around fees,
premiums or other charges
complaints relating to information provided to (or not provided to) clients
complaints relating to advice given
FSPs are also required to maintain summary data about complaints, including:
number of complaints received
number of complaints upheld
number of rejected complaints and reasons for the rejection
number of complaints referred to an ombud and their outcome

RDR (Retail Distribution Review)
The FSB (now the FSCA) first published its Retail Distribution Review (RDR) in November
2014. The RDR is an ongoing project.
The RDR proposed several regulatory reforms related to the provision of financial advice and
the distribution of financial products. Amongst other things, the RDR sought to incorporate the
principles contained in the FSCA’s Treating Customers Fairly (TCF) code.
In its June 2018 update, the FSCA stated that it would “continue to implement the RDR
proposals in a phased manner, aligning the development of regulatory instruments to broader
legislative and regulatory developments giving effect to the Twin Peaks model of financial sector
regulation”. This means the RDR proposals will be implemented using a combination of
instruments available under existing financial sector laws (such as the Financial Sector Regulation
Act) and the planned Conduct of Financial Institutions (COFI) Act.
As a result of the RDR proposals new terminology may be introduced, including Product
Supplier Agent (PSA) for tied broker and Registered Financial Adviser (RFA) in place of IFA. The
proposed RDR changes could require PSAs to state that they do not offer independent advice but
merely represent the products of their employer.
These proposals are still subject to industry feedback.
Consumer research conducted by the FSCA found that terms like “broker,” “agent” and “tied
adviser” were not well understood by retail investors. The term “financial adviser” was reasonably well
understood by urban respondents. However, in its December 2019 update the FSCA stated that,
“Notwithstanding the finding that some terms are reasonably well understood by some consumer
groupings, there do not seem to be any already understood terms that could readily be used to clearly
distinguish between the PSA and RFA adviser categories. Instead, it is clear that whatever designations
are finally adopted will require a wide-ranging consumer awareness and education campaign.”
The FSCA’s latest proposals are that a PSA (including a juristic PSA) should be limited to
providing both advice and non-advice intermediary services in respect of its “home financial
group’s products only.”
The FSCA’s December 2019 update also clarified its position on attempts to more clearly
delineate intermediation activities, outsourced services and advice. The FSCA is considering
several possible legislative proposals, including:

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