NZ Government Examining Financial Adviser Rules

by Mary Swire, for LawAndTax-News.com, Hong Kong

24 April 2008

New Zealand Commerce Minister Lianne Dalziel on Tuesday welcomed the Finance and Expenditure Select Committee’s call for fresh submissions on proposed changes to the Financial Advisers Bill.

The changes include a revised definition of the term‘financial adviser’, and an alternative approach with regard to who would regulate financial advisers.

Currently the bill has an all-encompassing definition of a financial adviser. The proposed changes will redefine a financial adviser as someone whose main business is providing financial advice.

The Select Committee is seeking feedback on proposed changes to the co-regulatory model currently contained in the bill involving frontline supervision by Approved Professional Bodies (APBs) with oversight by the Securities Commission, and recommends simplifying the model so that the Securities Commission undertakes the main supervisory role.

"These suggestions meet concerns that were raised with me since the Bill went to Select Committee," Ms Dalziel explained.

She continued:

"One particularly compelling argument for the alternative supervisory regime is that it will enable greater regulatory control of financial advisers to be fast-tracked by up to two years. It will also enable greater consistency of regulation to be imposed across the many different groups offering financial advice than might have been possible with a range of APBs setting the standards for their own members."

"It's become clear to me that following the recent finance company collapses and the Blue Chip debacle the public wants greater regulation in place sooner rather than later. Moving frontline supervision straight to the Securities Commission would be an effective way of making that possible and doesn't preclude the possibility of devolving frontline responsibility back to APBs at some future date."

"Now the industry will have the opportunity to consider this option and make a submission on it."

The Commerce Minister went on to add that:

"In my first reading speech I raised the matter of the broad definition of financial advisers. It was never the intent of the Bill to capture every person who discusses financial matters but it was necessary to start this way so we would have a clear picture of who should and should not be covered. Subsequent feedback from the industry has enabled the definition to become clearer and more focussed."

"The recent collapse of finance companies together with industry feedback and investor responses has demanded a change in focus for this Bill. Where it was once primarily about reviewing the regulations around the financial sector and encouraging industry participation, it is now on rebuilding investor confidence as quickly as possible."

The Select Committee has called for further public submissions on the Financial Advisers Bill to be made before 16th May, 2008.

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