The Government has released the draft disclosure requirements that will apply in the new regime for financial advice.
It is seeking feedback on whether the draft regulations achieve the policy intent and if they are workable in practice for the different ways in which advice could be given.
This follows MBIE’s discussions paper on the disclosure requirements in April (see: MBIE Seeking Feedback…).
In February, Cabinet agreed on the disclosure requirements that will apply in the new regime and once it is in force, anyone who gives regulated financial advice to a retail client will be required to disclose information regarding:
- The licence they hold and certain duties that they are subject to
- The financial advice services that they can provide, the range of products they can advise on, and any limitations on the advice
- The applicable fees and costs associated with the advice
- The commissions, incentives and other conflicts of interests that could impact the advice
- The complaints handling and dispute resolution process
- Any previous disciplinary history, and certain criminal convictions or civil proceedings
- In the case of financial advisers, bankruptcy proceedings within four years of the date of discharge
MBIE asks a series of questions throughout the Exposure Draft on each section of the draft regulations, including those on record keeping.
It stated that once the submissions have been considered, it will finalise the regulations for consideration by Cabinet in early-2020.
Financial Advice New Zealand has welcomed the Government’s draft exposure bill that will set disclosure requirements in the new financial advice regime.
Chief Executive, Katrina Shanks, says the association backs increased transparency in the sector and supports moves in that direction.
“Though we generally support the proposed requirements around record-keeping regarding disclosure made to clients – including on conflicts of interest on commissions and other incentives, disciplinary issues, and about what advice an adviser is licensed to provide – in our view some of them need further consideration and development, and we will be providing feedback on them,” said Shanks.
“Many advisers, of course, already do much of this, but making it a requirement for all advisers will be a good thing for clients and for building public confidence and trust in the sector.”
The draft regulations in full can be viewed here and the exposure draft here.
Submissions close at 5pm on Friday 8 November 2019. Click here to make a submission.