The Insurance & Savings Ombudsman has approval to settle disputes between financial services providers and their customers, under new rules for the industry.
New legislation is on the way for people providing financial advice with the Financial Advisers Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 due to be implemented this year
Together, they introduce new rules to govern the way financial advisers give financial advice and will provide new ways for consumers to complain about advice received.
The Insurance & Savings Ombudsman (ISO) today received Government approval as a disputes resolution scheme under the Financial Service Providers (Registration and Disputes Resolution) Act 2008.
The ISO Scheme was set up in 1995 by the insurance industry to provide consumers an avenue to resolve
disputes with insurance and savings companies.
It provides a free an independent opinion on disputes.
Insurance and Savings Ombudsman Karen Stevens said the ISO scheme would help encourage confidence in the financial services sector.
“The purpose of the financial adviser regulation is to provide New Zealand consumers with the confidence and dispute resolution support to confidently seek professional financial advice and to have a transparent and understood process for resolving disputes,” she said.
Ms Stevens said the ISO scheme would be formally available for registrations later in the year but was mindful of the cost to financial service providers.
“It is important that both the consumer and providers get value for money out of this requirement. The registration process is an opportunity to assist providers maintain skills and standards for the benefit of the entire industry,” she said.
The Financial Advisers Act requires financial advisers to register with the Companies Office on a public register and join a disputes resolution scheme. Advisers providing a financial planning service will need to qualify to become an authorised financial adviser (AFA).
But if the nature of the advice is just on the provision of a narrow range of everyday “category two” financial products such as bank term deposits, credit card and most insurance products, advisers will need to be registered but not authorised – and in most cases that will be under the umbrella of their employer, as a qualifying financial entity (QFE).
The Securities Commission is consulting on a draft code of professional conduct for authorised financial advisers that sets minimum standards of competence, skills, ethical behaviour and client care for authorised financial advisers.
It also provides two avenues to make complaints. If an investor thinks they have been “ripped off” by the adviser or the nature of the advice is in dispute, they will be able to take action through an independent disputes resolution scheme, rather than via an expensive court case.
Complaints about the professional conduct of an adviser can be made to the Securities Commission directly, for investigation by a new disciplinary committee to be set up under the act.
Some in the industry have said the incoming Financial Advisers Act may have the unintended consequence of causing investors to shun professional advice in the face of higher costs and weaken their ability to seek redress through courts.
Mon, 24 May 2010