It appears that new legislation will grant the wishes of the Financial Markets Authority (FMA) in relation to financial advice.
Currently, the FMA does not oversee licensing for all financial advisers. Earlier this year, the FMA’s Strategic Risk Outlook 2017 identified problems in the current regulation and licensing framework. For example, some businesses were using registration on the Financial Services Providers Register to create a perception of legitimacy, despite this being no sort of licence to provide financial services in NZ.
The FMA observed that its powers to act on problems were sometimes limited by its regulatory scope. The FMA also identified “Sales and advice practices designed to meet the needs of consumers” as a key outcome to be pursued.
In keeping with that aim, the Ministry of Business, Innovation and Employment (MBIE) has received submissions on a new draft Financial Services Legislation Amendment Bill (Bill).
In its current form, the Bill will bring in universal competence standards for financial advice services, under a Code of Professional Conduct to be developed.
The Bill will repeal the Financial Advisers Act 2008, and widen the scope of the Financial Markets Conduct Act 2013, effectively to cover regulation of all financial products, services and advice (including “robo-advice”).
The current Bill would also impose a duty on financial providers to put the customer’s interests first. The specifics of this and other obligations will be developed over the next two years.