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Changes were made to the Financial Advisers Act by Parliament on 23 June 2010. As a result, the following material is currently under review by the Securities Commission.

FINANCIAL ADVICE
Information for the financial sector

Organisations employing advisers should familiarise themselves with the Financial Advisers Act and the provisions that apply for Qualifying Financial Entities (QFEs).

The Financial Advisers Act will come fully into force on 1 July 2011. The law will regulate all individuals who are financial advisers and some of the businesses that employ them.

The Minister has introduced a Bill proposing amendments to the Financial Adviser Act to make technical clarifications and improve the efficiency of the new regulatory regime. See Minister's release.

An industry/consumer Code Committee, together with the Securities Commission, the Ministry of Economic Development, the Companies Office, the Ministry of Consumer Affairs and ETITO, the industry training organisation for the financial sector, are involved in developing the legal and policy framework to implement the Financial Advisers Act.

The Code Committee's role is to develop a Code of Professional Conduct which will set the minimum standards of competence, knowledge and skills, ethical behaviour and client care advisers will need to adhere to.

QFES

Some entities, including institutions like banks and insurance companies, may be eligible to apply for and become Qualifying Financial Entities (QFEs). The compliance obligations applying to financial advisers who are employees or nominated representatives of QFEs are streamlined provided that the QFE has the organisational capacity to take frontline responsibility for the conduct of its advisers.

Organisations wishing to become a QFE must satisfy the Securities Commission that they are able to ensure their advisers are exercising reasonable care, diligence and skill and meet the professional standards specified in the Code of Conduct.

See the QFE "Get Ready" Checklist. Download as PDF (13KB) | View as HTML

An Adviser Business Statement (ABS) is a requirement for authorisation.
See the QFE Adviser Business Statement Guide on how to prepare your ABS. Download as PDF (213KB) | View as HTML

Regulatory approach

The Securities Commission is developing, in consultation with industry, its approach to the regulatory supervision of Authorised Financial Advisers (AFAs) and QFEs. Its aim is to promote a culture of professionalism across the financial advice industry, underpinned by competence standards for individual advisers and appropriate organisational capacity in advisory businesses.

The Code of Professional Conduct will play a central role in setting standards for the way advisers interact with their clients.

Establishing a register of financial service providers

The Companies Office is developing a comprehensive public register of all financial service providers including financial advisers. It is anticipated that the register will open towards the middle of August. Financial advisers must be on the register by 31 March 2011.

Complaints, disputes and discipline

To be registered, financial advisers need to be a member of an approved consumer dispute resolution scheme or the Government's reserve scheme being established by the Ministry of Consumer Affairs. These will be approved or established by the end of June 2010.

The Securities Commission is developing a process to handle complaints and will establish a Disciplinary Committee to deal with adviser misconduct.

Related information

25 June 2010

Media release: Financial advisers urged to get ready for regulation

See also

- Introduction
- For consumers
- For financial advisers
- For education institutions
- Consultation
- Frequently asked questions