The FAA will be replaced by the Financial Services Legislation Amendment Bill if it is passed – it’s currently in Select Committee stage.
FMA spokesperson Edwin Mitson said brokers and advisers were contacted in December to keep them informed about upcoming industry changes.
“One of the ways advisers and brokers can keep track of developments is to sign-up to our alerts, and a significant number of advisers responded to our email by doing so,” he said. “We would encourage anyone who didn’t sign-up to the alerts at the time (the email was sent) to consider doing so (now).”
He added that the Select Committee’s consultation on the proposed changes to financial adviser legislation opened on December 20, 2017 and closes on February 23, and the FMA is encouraging brokers and advisers to make a submission on the proposed changes.
In addition, it also plans to run workshops this year and other activities to help financial advisers understand the changes, what they need to know, and what they need to do. Information on the sessions will be announced in due course.
The new Bill will create a new regime for financial advice – under the changes, by May 2021 all financial advice providers who give advice to retail clients will need to obtain a full licence to do so by the FMA.
In 2016, the government agreed to amend the regulatory regime that oversees the provision of financial advice in New Zealand following a statutory review by the Ministry of Business, Innovation and Employment (MBIE). MBIE claims these changes will improve access to high quality financial advice for New Zealanders, and will establish a “level playing field of regulation for all who provide financial advice.”
The proposed changes will address the following areas:
- Who can give financial advice – anyone giving financial advice will need to be engaged by a financial advice provider and, to give advice to retail clients, the provider will need to be licensed by the FMA.
- Conduct and competence requirements – all those giving financial advice (businesses and individuals) will be held to conduct and competence requirements. In particular, brokers and advisers must give priority to the client’s interests, and must disclose certain information to clients (this will be prescribed in regulations and may vary for wholesale and retail clients).
- Flexible enforcement – financial advice providers will be subject to the compliance and enforcement tools in the Financial Markets Conduct Act 2013, such as civil liability, licencing actions, such as censure, and the imposition of actions plans. All financial advisers will be subject to the existing Financial Advisers Disciplinary Committee and will face disciplinary consequences if found to have contravened a duty.
- Improving access to advice – regulatory boundaries have been removed to make it easier for those giving advice to respond to their clients’ needs and wants. The requirement that only a “natural person” can give personalised financial advice has been removed. The FMA has used its exemption powers under the current reading of the FAA to allow, from next year, financial advisers to provide digital advice.
To receive information on the changes, brokers and advisers need to register here.
FMA emails all brokers on advice changes
Law firm offers digital advice tips
You've reached your limit - Register for free now for unlimited access
To read the full story, and get unlimited access to Insurance Business website content, just register for free now. GET STARTED HERE
Already a website member? Log in below.