The Financial Services Federation (FSF) has applauded the passing of the Financial Services Legislation Amendment Bill (FSLAB), saying the legislation will improve New Zealand financial services sector.
Policymakers made the right decision in ensuring brokers are captured by the bill’s provisions, FSF executive director Lyn McMorran said, noting the potential for conflict suggested in the recent Australian Royal Commission where brokers receive remuneration by way of commission from financial services providers.
“Brokers look at a whole range of different providers and decide which products they think are best for the consumer,” she said. “That advice must be guided by the principle that the recommended product is in the customer’s best interest, and not because it pays the highest commission.”
Read more: FSLAB passes final hurdle in Parliament
FSF also commended the successive Ministers of Commerce and Consumer Affairs for accepting the industry body’s recommendations to exempt consumer credit providers from the provisions of the bill. It emphasised that lenders’ advice practices are already regulated by the Credit Contracts and Consumer Finance Act (CCCFA) and that guidance regarding lenders’ obligations to customers is provided in the Responsible Lending Code.
McMorran said this avoids a huge legislative double-up in the process and is a sensible outcome for all parties. To have done otherwise would have meant an overlap unnecessarily burdening regulators, businesses and their customers, she noted.
“This is a fantastic example of policymakers listening to business and making a sensible decision that balances the ability to do business with consumer protection,” McMorran added. “We are really pleased that government understood we are not trying to wriggle out of anything.”
FSF is a non-profit organisation representing New Zealand's responsible, non-bank financial institutions.