The financial planning industry’s asset – trust – can be significantly undermined by poor conduct and affect sustainability of the business, the Securities Commission said today.
Its executive director, ICMD Sharifatul Hanizah Said Ali said that as it strives to enhance professionalism in the financial planning industry, it is imperative to raise the bar on professional standards and conduct requirements.
In this respect, she said that the SC on the 1st of April this year issued ‘Guidelines on Conduct for Capital Market Intermediaries’, which also applies to licenced financial planners. “These Guidelines aim to foster good business conduct and a good corporate culture that is centred upon the fair treatment of clients and to promote trust in all intermediaries,” she said.
She said this in a keynote address at the 9th MFPC e-Conference on Shariah Wealth
Management & Financial Planning “Post-Pandemic Transformations: Aligning Focus and Assessing Impact” in Kuala Lumpur
Further to the requirements under these new conduct guidelines, Sharifatul said that financial planners would need to demonstrate skill, care, and diligence when providing specific advice on listed securities and unlisted debt securities by complying with enhanced requirements added a year ago in the Licensing Handbook.
“As at the end of 2021, 20% of financial planning firms had representatives fulfilling the additional competency requirements to provide specific advice to investors on a wider spectrum of securities,” she said
Towards ensuring that the specific advice provided is suitable for clients, she said that a financial planner must undertake a suitability assessment before making recommendations to ensure that the product is suitable for the client and if it matches the risk profile and needs of the client.
To this end, she said that it is commendable to see the industry’s harmonisation and elevation of the code of ethics and best practice standards by the relevant certification associations. The industry code of ethics which espouses principles such as integrity, fairness, and objectivity, sets the professional conduct expected of a licensed financial planner.
