Changes to Financial Advisers' regime should be helpful

“Commerce Minister Simon Power’s acknowledgment that the Financial Advisors Act and Financial Service Providers (Registration and Dispute Resolution) Act need to be changed is encouraging,” Chapman Tripp Partner Tim Williams said today.

“We have been pushing for changes to repair some serious flaws we have identified in the legislation,” he said.  (For previous comments, click here)“

The issue now is what precisely the Minister has in mind and whether it will address the worst of the problems with the new regime.

“Top of my list for change would be a reversal of the decision to deny financial advisers the protection of operating through a limited liability company.

“If allowed to proceed, this would have a number of consequences that we doubt were intended, including requiring individuals in broking and large advisor firms to describe advice as their own rather than that of the firm, and requiring broker tip sheets to attribute recommendations to individuals who would have to provide disclosure statements,” Mr Williams said.

“Obviously, the prohibition against listed companies giving guidance would need to be amended also, as it is inconsistent with the statutory and NZX Listing Rule continuous disclosure obligations.” 

“It would be good also if persons giving advice solely to institutions could be excluded from all or parts of the Acts as well.  Including institutional advisors seems to offend against the principle that meritless red tape is to be avoided,” Mr Williams said.

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Related topics: Financial services regulation

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