The Financial Markets (Conduct of Institutions) Amendment Bill has been returned from the Select Committee, and Financial Advice New Zealand says it is pleased to see that some of its recommended changes have been implemented – however, it says there are still some “outstanding issues” regarding remuneration which need to be addressed.
CEO Katrina Shanks acknowledged that the Bill has now excluded financial advisers, as they are already regulated under their own regime which is due to come into force next year. However, she says the issue of remuneration still needs the be addressed, as the Bill currently has “wide-reaching powers” to regulate adviser remuneration, which she would like to see removed.
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“Financial Advice NZ provided a comprehensive submission on the bill, and at first look many of these points have been picked up in the amended bill which has been referred back to the House for the second reading after the election,” Shanks commented.
“The focus of Financial Advice NZ’s submission was to exclude financial advisers and financial advice providers from the Fair Conduct Programme in the first instance. Financial advisers’ conduct is already regulated under the Financial Services Legislation Amendment Act, which comes into effect in March 2021. We are pleased to see this recognised, and for this amended bill to concentrate on the conduct of Financial Institutions.”
“We are also pleased to see the commencement of the bill has been extended for another year, the definition of fairness has been given more detail, and the claims process has been explicitly removed from the bill,” she added.
Shanks says that in addition to remuneration, Financial Advice NZ will be seeking “further consideration” on section s446M of the Bill, which states that financial institutions have to consider training and supervision for financial advisers.
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“We had been concerned that the bill contained wide reaching powers to regulate remuneration for advisers and while we would have liked to see these removed from the bill, we acknowledge the amended bill has now been strengthened to ensure there are safeguards around this,” Shanks said.
“We are pleased to see financial advisers have been removed from the duties of the bill which means they do not have to abide by the Fair Conduct Programme as they have their own conduct regime. However, they have been included via s446M in that financial institutions have to consider training and supervision for financial advisers, as intermediaries. This is an area we will be seeking further consideration.”