The financial wellbeing of all New Zealanders is at the heart of regulatory changes to the financial sector, said Minister David Clark during his opening address of Financial Advice NZ’s Be Inspired, Be Energised conference on Tuesday (16 November 2021).
The Minister of Commerce and Consumer Affairs quickly reminded the online audience that it is his job to be an advocate for consumers saying the Financial Markets (Conduct of Institutions) Amendment Bill – currently making its way through Parliament – will require financial institutions to treat their customers fairly.
He said: “The bill requires banks and insurers to have methods for monitoring distribution of their products and services, including when they are dispersed through financial advisers. I know this issue has caused some concern in the financial advice community.”
Clark went on to assure conference attendees that he does not want to interfere with the provision of financial advice or to create costly oversight obligations.
“Our intention is simply to ensure that providers and distributors are working together in the interests of consumers,” he said.
“The bill also regulates certain sales incentives, as the government has previously made clear. The intention is to prohibit incentives based on targets rather than to ban commissions altogether.
“These changes will help us be certain that banks, insurers, and the financial advice sector, all take responsibility for ensuring the financial wellbeing of New Zealanders.”
Insurance contracts
Clark is also progressing other initiatives aimed at supporting financial resilience and wellbeing among New Zealanders.
“For example, there’s changes to New Zealand’s insurance contract laws so Kiwis can be confident insurance policies will work as they expect them to,” said Clark.
“The government is also improving the ability for consumers to access and share their personal data through the Consumer Data Right. We expect that through this, businesses will have the ability to develop unique products and services to offer higher quality consumer experiences.
“This could mean new tools for providing advice which are enabled by better access to client data.”
…there’s changes to New Zealand’s insurance contract laws so Kiwis can be confident insurance policies will work as they expect them to…
Clark also touched on the future of the country’s four financial advice dispute resolution schemes saying he is working on aligning the schemes to “promote fairness”.
“Our review is working on aligning the schemes’ rules and ensuring consumers have better access to justice and compensation via these schemes,” he said.
Clark said financial advisers play a key role in helping Kiwis with their financial capability and in making their finances work for them.
“It is crucial the entire financial services sector gets together to improve financial capability and financial outcomes for all Kiwis – especially the most vulnerable,” he said.
Clark also gave an update on licence figures saying transitional licences have been granted by the FMA to more than 3,000 providers, over 10,000 financial advisers, and more than 12,000 nominated representatives. He says more than 82% of licensed providers have less than 10 financial advisers.
“All those with a transitional FAP licence should now be applying for their full licence,” he said. “More than 80 financial advice provider licences have been issued to date.
“If you are a financial adviser and have not already applied for your full licence then I encourage you to do so. The FMA has done a lot of work in providing expectations and is at the ready to help you understand the process.”