Significant changes to the rules proposed for financial advisers could delay introduction of the industry's code of conduct.The revised Financial Service Providers (Pre-Implementation Adjustments) Bill has been released from Select Committee today, with a
Significant changes to the rules proposed for financial advisers could delay introduction of the industry’s code of conduct.
The revised Financial Service Providers (Pre-Implementation Adjustments) Bill has been released from Select Committee today, with a raft of changes to the way financial advisers will be regulated under the incoming Financial Adviser Act 2008 and the Financial Service Providers Act.
- A key change is that mortgage brokers and life insurance advisers will no longer need to be authorised under the Financial Advisers Act.
- Focusing the financial adviser regime on those who provide personalised advice as a central part of their business.
- Clarifying the meaning of a number of key terms, including “financial planning”.
- Expanding the powers of the Government and the Securities Commission to provide exemptions.
- Amendments to strengthen the Securities Commission’s power to monitor and enforce the legislation.
- Rules governing the regulation of Qualifying Financial Entities have also been rewritten to accommodate groups of entities.
Providers of financial advice to wholesale clients are big winners of today’s changes. A financial adviser will not be required to be authorised or comply with the code of conduct to provide financial adviser services to a wholesale client.
The Financial Advisers Act, which kicks off early next year, requires anyone providing a financial planning service to become an authorised financial adviser (AFA).
But if 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.
Large organisations such as banks can take broad cover for staff by becoming a Qualifying Financial Entity (QFE), effectively taking responsibility for the advice of their employees while also looking after the training an regulatory requirements.
Financial service providers must be registered by December this year. Financial advisers, however, have an extension until March 31 next year.
