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. Key details are outlined below and at What should an organisation do in anticipation of the implementation of the Financial Advisers Act?

The implementation date for the Financial Advisers Act is yet to be confirmed but is expected to be late 2010.

When implemented, the law will regulate all individuals who are financial advisers and some of the businesses that employ them.

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.

Educating financial advisers
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 agents of QFEs are streamlined provided the QFE has the organisational capacity to discharge certain obligations related to its advisory business.

Organisations wishing to become a QFE must satisfy the Securities Commission that it is able to ensure its advisers are exercising reasonable care, diligence and skill.

Over time the Commission would like to see QFEs mapping their training and assessment to the National Qualification Framework so that there is an independent and objective measure of skills training in their organisation. More information about this approach will be published later in 2009.

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 scheduled to become operational during 2010.

Disclosure regime and regulatory supervision
During 2009 and 2010 the Securities Commission is developing, in consultation with industry, its approach to the regulatory supervision of financial advisers. 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 Conduct to be developed by the Code Committee will play a central role in setting standards for the way advisers interact with their clients.

A complaints and disputes process
The Ministry of Consumer Affairs is assisting industry to develop disputes resolution processes. The Securities Commission is developing a process to handle complaints and will establish a Disciplinary Committee to deal with adviser misconduct.

See also

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