MBIE is seeking feedback on a range of changes to the Financial Markets (conduct of institutions) Amendment Bill that regulates those working in sales and distribution activities as well as administrative, copywriting, advisory and fulfilment services.
“This is a great announcement for us,” says Katrina Shanks, CEO, Financial Advice NZ.
Shanks says her organization is concerned about the proposed legislation as it stands, and is pleased MBIE has opened up a consultation, even though the window is small – with submissions closing on 4 June 2021.
“We have real concerns about the CoFi Bill,” says Shanks. “Unless it is changed, there would be two lots of culture and conduct regulations that would apply across all financial advisers. What this consultation does is offer the sector a chance to have their say and help MBIE provide a better solution for intermediaries which is fantastic.”
Financial Advice NZ is contacting its members for their feedback to help it prepare a submission to MBIE on their behalf.
“We will be putting in a very strong submission on behalf of the sector,” says Shanks. “Advisers can make their own submission if they wish or we can help them.
“This is a very important discussion document for financial advisers, it’s the one thing that was still unclear and unsettling for the sector. So this consultation is positive for the sector.
“The fact MBIE has paused for this, and come out for a round of consultation, is extremely positive.”
Among the concerns raised by those in the financial services industry are that the bill’s current requirements:
- Are too broad
- Are unclear
- Overlap with or duplicate the regulation of financial advice under FSLAA (and are therefore unnecessary)
- Would require compliance in practice by intermediaries with multiple compliance programmes, despite the changes made at Select Committee
- Would require financial institutions to control the conduct of independent third parties over whom they have little or no control
MBIE concedes the word ‘intermediary’ includes a broad spectrum of roles and is proposing two main amendments to the bill:
1) Amend the current definition of “intermediary” in the bill to capture only persons involved in the sale or distribution of a financial institution’s relevant service or associated products, and
2) Narrow the obligations that apply to financial institutions in respect of “intermediaries” to minimise compliance cost, and duplication of regulation, while still ensuring financial institutions take appropriate responsibility for consumer outcomes
In brief, the proposed amendments include focusing on sales and distribution to capture those providing non-advised sales as well as intermediaries providing regulated financial advice in relation to associated products who are regulated under FSLAA. The intention is also to continue to capture dealer groups.
Download the full Discussion Paper here. Feedback on the proposal close 5pm 4 June 2021.