News that CoFI legislation could be scrapped by a National-led Government – before it is even introduced in 2025 – caught the attention of Riskinfo readers this week…
The future of the CoFI reforms under a National Party-led government is unclear, according to an industry update published earlier this week.
Released by full service legal firm, MinterEllisonRuddWatts, the update offers an initial assessment of what a National-led government will mean for the financial services sector.
The assessment, which covers a range of areas, makes reference to an announcement made by National Party Leader, Chris Luxon, at the 2023 Financial Services Council Conference in August, at which he indicated a National Government would repeal the Financial Markets (Conduct of Institutions) Amendment Act 2022 (CoFI).
Noting that the purpose of the CoFI legislation – targeted to come into effect on 31 March 2025 – is to help ensure financial institutions such as banks and insurers comply with a fair conduct principle to treat consumers fairly, this update speculates that the National Party appears “…insistent on “cutting red tape” to help “get financial markets working efficiently, quickly and appropriately””.
Advice practice remuneration incentives
The update goes on to reflect that repealing the CoFI legislation, amongst other impacts, may also involve “Revoking regulations that will restrict the incentives that can be paid by intermediaries (such as financial advisers or brokers) to some of their staff in relation to advice and services provided to retail clients.” (See also: CoFI Guidance Published by FMA.)
Timing
The firm notes the final election result will be published by the Electoral Commission on Friday, 3 November, after which at least some of the priorities of the incoming government will likely be set out in a coalition agreement expected to be published in the next week or two, while others will be developed over the term of government.
…the pace of change for financial services will not abate
In sharing their final thoughts in this update, the firm’s panel of experts state that “What is clear is that the pace of change for financial services will not abate with the introduction of a new government” – and that although it is unclear exactly what policy changes might be implemented by a National-led coalition, financial services providers will need to be alert to the proposed policies and ready for change.
Click here to read the full analysis from the MinterEllisonRuddWatts’ expert team on what a National-led government will mean for the financial services sector.