Two Bills were enacted on September 2008 that will govern the provision of financial services in New Zealand:
- Financial Service Providers (Registration and Dispute Resolution) Act 2008 (‘FSPA’). The FSPA is designed as umbrella legislation to govern all providers of financial services. Key features include ensuring that all financial service providers are registered and that persons receiving financial services have access to appropriate avenues of dispute resolution and redress, by requiring financial service providers to be members of an approved dispute resolution scheme.
- Financial Advisers Act 2008 (’FAA’). The FAA regulates the provision of financial adviser services. The purpose of the FAA is to “promote the sound and efficient delivery of financial advice,” and to “encourage public confidence in the professionalism and integrity of financial advisers.”
Subsequently, the Pre-Implementation Adjustment Bill was released and then split into two Bills - the Financial Advisers Amendment Bill (No 2) and the Financial Service Providers (Registration & Disputes Resolution) Amendment Bill. It contained a number of fundamental changes designed to simplify the legislation and align it to the purpose of the Act.
Both were enacted into law in June 2010.
The Acts contain a number of tools to regulate the provision of financial advice*
(a) Registration of those who provide financial services (including financial adviser services)
(b) Compulsory membership of approved an dispute resolution scheme
(c) A statutory requirement for financial advisers to exercise care, skill and diligence and not engage in misleading and deceptive conduct
(d) Disclosure requirements
(e) Authorisation (Licensing) of advisers providing certain financial advice services
(f) Requirement for authorised financial advisers (AFAs) to be of good character
(g) Minimum competency and continued professional training requirements for AFAs
(i) Disciplinary oversight
* Depending on category of adviser and/or nature of their services
There are details outstanding, for example the AFA Code of Professional Conduct remains in draft and regulations are still to be released. Once known, we will update you accordingly.
Sovereigns aim is to support you to build your knowledge of these two important pieces of legislation, as well as any supporting regulations and the Code, to enable you to understand the impact these will have on your business and prepare accordingly.
Timeline - click image to enlarge
