Govt to make key changes to financial adviser regime

Cabinet has this week made some important decisions about the implementation of the Financial Advisers Act and the Financial Service Providers Act, which were both passed into law in 2008.

These decisions will allow for regulations to be developed that set out the disclosure financial advisers will have to make to clients, the registration and authorisation fees for financial advisers and the form of the new register of financial service providers.

Commerce Minister Simon Power said the new disclosure regulations will require financial advisers to clearly disclose key information such as what their fees are, whether they have any limitations on their services and whether they have any conflicts of interest.

Cabinet has also given policy approval for amendments to the way investment transactions are regulated under the Financial Advisers Act.

These changes will tackle one of the significant problems identified by industry players, which is that the current regime only allows investment transactions to be made by individuals.

Under the proposal, entities will be able to undertake such transactions, provided they are registered and adhere to minimum standards of conduct.

Mr Power will write to the commerce select committee shortly to ask it to consider the proposed amendments around investment transactions as a part of its consideration of the Financial Service Providers (Pre-Implementation Adjustments) Bill, which amends the two acts.

This will give the public time to submit on the new proposals.

“I'm confident the proposed regime for investment transactions will provide safeguards to consumers, while being more appropriately fitted to current market practice,” Mr Power said.

”It’s critical that industry gets involved in the committee’s consultation to ensure we have legislation that is effective.”