Financial advisers, dispute resolutions bills back
Hon Lianne Dalziel
Minister of Commerce
Hon Judith Tizard
Minister of Consumer Affairs
9 September 2008 Media Statement
Financial advisers and dispute resolutions bills back
Commerce Minister Lianne Dalziel and Consumer Affairs Minister Judith Tizard today welcomed the select committee report back of two bills that will beef up regulation of financial advisers and institutions, ensuring greater accountability of advisers and providing consumers with effective avenues for complaints.
Lianne Dalziel supported the recommendations made to the Financial Advisers Bill in the Finance and Expenditure Committee’s report back to Parliament.
A number of significant changes were recommended which resolve some earlier difficulties identified with the Bill’s broad definition of a financial adviser and puts in place more effective processes to supervise this sector.
"It was apparent after the Bill was introduced that the co-regulatory model it proposed was not workable in practice, particularly in light of the number of complaints that arose out of the recent finance company collapses" Lianne Dalziel said.
"The Committee has done an excellent job resolving these difficulties and engaging with both industry and consumers throughout the Select Committee process."
The Committee recommended new definitions of financial advice, including a product-based approach to the definition of financial advice; tiered categories of financial adviser services; and, the development of a Qualifying Financial Entity model.
It has also re-crafted the regulatory structure for financial advisers giving central regulatory oversight to the Securities Commission and establishing a new member, to be called Commissioner of Financial Advisers, who will be responsible for overseeing the establishment of the rules that will govern financial advisers as well as the disciplinary processes that will be set up.
"However, the expertise and experience of the professional bodies will still be used. The Bill provides a high level framework that establishes a Rules Committee made up of relevant industry representatives to advise the new Commissioner on a code of conduct for advisers," Lianne Dalziel said.
Once the Bill
has been passed by the House, officials will begin the
process of developing the necessary processes to implement
the new framework.
"I am pleased that the Committee positively responded to the submissions that were received on the Financial Advisers Bill, and I think that we now have a law that will effectively promote confidence in financial advisers."
The Finance and Expenditure Select Committee also reported back on the Financial Service Providers (Registration and Dispute Resolution) Bill. The Bill requires all financial service providers to be registered on a central register and requires that all financial service providers belong to a dispute resolution scheme.
Consumer Affairs Minister Judith Tizard welcomed the progress of the two bills.
"Consumers of all financial services, including financial adviser services, need access to a free, high quality dispute resolution service. Both Bills will go a long way towards encouraging public confidence in the integrity and professionalism of financial advisers and service providers."
The Financial Service Providers (Registration and Dispute Resolution) Bill requires all financial service providers to belong to an approved dispute resolution scheme.
"Consumers can have confidence that they will be able to make a complaint easily and it will be dealt with effectively. In time, this will help deter poor practices amongst financial providers."
Both Bills are likely to have their second reading this month.