More can be done to refine the Financial Markets (Conduct of Institutions) Amendment Bill before it becomes law, believes Katrina Shanks, CEO of Financial Advice NZ.
While many of the organisation’s recommendations were adopted at the select committee stage following its 10 June meeting, Shanks believes a second reading of the bill under the next Parliament – post the 19 September General Election – will provide a chance to modify it further.
Among the concerns raised by Financial Advice NZ in June were:
- The bill’s power to regulate sales incentives
- The bill has no definition of ‘fair’
- Confusion over whether financial advisers are included in fair conduct programmes
- The definition of intermediary
- The claims process
- The timing of the bill’s enactment
While the industry body is pleased the definition of ‘fairness’ has been tightened up in the latest version of the bill, and the claims process has been removed, Shanks is concerned financial institutions have to consider training and supervising financial advisers under section s446M of the bill.
“This is an area we will be seeking further consideration,” says Shanks.
“Financial Advice NZ provided a comprehensive submission on the bill, and at first look many of these points have been picked up in the amended bill.
“The focus of Financial Advice NZ’s submission was to exclude financial advisers and financial advice providers from the Fair Conduct Programme in the first instance.”
Financial advisers’ conduct is regulated under the Financial Services Legislation Amendment Act, which comes into effect in March 2021.
“We are pleased to see this recognised, and for this amended bill to concentrate on the conduct of financial institutions,” she says.
“We had been concerned that the bill contained wide-reaching powers to regulate remuneration for advisers, and while we would have liked to see these removed from the bill, we acknowledge the amended bill has now been strengthened to ensure there are safeguards around this.”
See our story: Financial Conduct Bill has serious flaws.