The Financial Services Legislation Amendment Bill (FSLAB) has passed its third reading in Parliament.
The bill is designed to establish a new regulatory regime around financial advice and advisers. The changes to the legislation are designed to ensure the same basic protections for consumers regardless of how they choose to access financial advice – whether that be in person or online.
“This will help address the problem of some advisers being incentivised to recommend a particular product because it has a higher commission attached to it,” Commerce and Consumer Affairs Minister Kris Faafoi said.
The minister explained the bill will require financial advice providers to be accountable for the advice provided to customers on their behalf, and that they will need to disclose key information to clients so they can make informed decisions. Under the new regime, anyone providing financial advice to retail clients will require a licence granted by the Financial Markets Authority. Other measures in the bill include a requirement for businesses to have stronger links to New Zealand in order to be registered on the Financial Service Providers Register.
“People providing financial advice will also need to meet new competency standards and comply with a professional code of conduct, which I expect to finalise in the coming months,” Faafoi said.
The new financial advice regime is expected to come into effect in the first half of 2020, with applications for transitional licences opening later this year. Changes that might be needed to the broader conduct of financial institutions will also be considered, Faafoi said adding that he will be consulting on options in May.
“These broader changes will work alongside the improvements made in this bill to ensure consumers can have confidence in the financial services sector,” the minister added.