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Amendments to financial advisers regime
Hon Simon Power
Minister of Commerce
12 October
2009
Media Statement
Amendments to financial advisers regime
The Government is proposing technical amendments to the Financial Advisers Act 2008 and the Financial Service Providers Act 2008 in response to concerns from industry, Commerce Minister Simon Power said today.
"The amendments intend to simplify the implementation of the Acts and reduce costs, while still encouraging public confidence in the industry and promoting sound and efficient delivery of financial advice," Mr Power said.
The bill will focus on changes to the Qualifying Financial Entity (QFE) model. A firm that is made a QFE by the Securities Commission will take responsibility for the advice provided by its employees and contractors on a limited range of products, instead of those people each requiring their own licence.
The proposed changes include:
• Requiring a QFE to name the individual contractors whose advice it will take responsibility for, instead of automatically being responsible for advice from all its contractors.
• Allowing a QFE's employees and named contractors to provide financial adviser services on the QFE's category 1 products (complex products such as shares), without being individually licensed. This is currently permitted only for the QFE's employees.
• Permitting the employees and named contractors to provide financial adviser services for products for which the QFE is a promoter under the Securities Act. Currently, the Financial Advisers Act allows this only if the QFE is the issuer of the product.
"I also intend to change term life insurance, bonus bonds, and call building society shares from category 1 to category 2, to ensure the public has easy access to simple, well understood financial products," Mr Power said.
A targeted consultation on the regulation of investment transactions is also being conducted.
"This consultation, along with the amendments I have proposed, will help ensure the Financial Advisers Act achieves its objectives in the most efficient and effective way possible," Mr Power said.
The public will have the opportunity to contribute at the select committee stage.
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