According to a report by BusinessDesk, Commerce Minister Paul Goldsmith said current adviser designations have been “unsatisfactory” and that not all advisers are required to divulge potential conflicts of interest and act for the benefit of their clients.
“Focusing on consumer interest and improved transparency will improve confidence in the regulation of the financial advice industry,” Goldsmith said in an official government release.
“Financial advisers, regardless of what they're offering, will need to follow a code of conduct and put the interests of the customer first,” BusinessDesk also quoted him as saying.
In Goldsmith’s proposed update to the five-year-old framework, the Authorised Financial Adviser, Registered Financial Adviser and qualifying financial entity designations will be replaced by two tiers.
These would be advisers who are individually accountable for meeting their obligations, and agents whose employers are accountable, BusinessDesk reported.
The Code Committee for Financial Advisers will develop a code of conduct that will set competency standards for financial advisers, who will need to disclose if they get paid for selling certain products.
Goldsmith’s proposals will also license firms instead of individuals to cut compliance costs.
The minister hopes to have legislation in Parliament before the end of 2016. He wants the proposed changes to stimulate more engagement from the wider public with financial markets.
"I want to make sure the financial advisers' regime isn't putting barriers in front of those conversations unnecessarily,” BusinessDesk quoted him as saying.
The government’s proposed changes to the laws governing financial advisers would compel them to be more transparent and put the interest of customers first.