The FSLA Bill confirms the course for financial advice regulation set by the February Exposure Draft:
Over the coming weeks, a special series of Financial Law Insights will discuss each of the key elements of the Bill and reform proposals in turn.
In our February 2017 Financial Law Insight we outlined the main reforms proposed for the regulation of financial advice as set out in an Exposure Draft of the current Bill. Under the Bill as now introduced:
It is a remarkable achievement for those involved to have been able to get this complex piece of regulatory reform introduced to the House before Parliament rises. There won’t be time for the Bill to be referred to a select committee, and a timetable for calling for submissions won’t be known, until after the 23 September election. However, introducing the Bill now allows the newly appointed Code Working Group to get on with its important work of devising a new code of professional conduct for financial advice services that will underpin the new regime.
There’s a lot to digest in the final form of the Bill. To its credit, MBIE has produced a helpful short form summary of its responses to the main points of contention raised in its earlier consultation process. That summary can be found here.
Ditching the widely unpopular proposed terms ‘financial advice representative’ and ‘agent’ for individuals sheltering under a financial advice provider licence will be welcomed, although the neutral replacement term ‘nominated representative’ is so bland it offers no clues as to what the individual may do.
Ditching the terms ‘broker’ and ‘broking service’ was a welcome surprise, and further demonstrates the effectiveness of consultation and constructive engagement, and the willingness of MBIE to respond to concerns when warranted.
Changing terminology may seem like shuffling deck chairs, but there are many more substantive reforms contained in the Bill. The previously signalled fundamental shift in the regulatory landscape now seems set in stone.
Rather than try to traverse the full array of issues raised by the Bill and the reform process in a single Financial Law Insight, what we will be doing over the weeks ahead is issuing a special series of Financial Law Insights. Each of these Insights will target a different aspect of the proposed reforms, so that by the end of the year you will have a comprehensive library of Insights covering all of the major aspects of the Bill (or at least, those aspects that we consider warrant comment and discussion!)
While the Bill can’t be progressed until well after the election, things won’t be standing still.
The MBIE team is working on regulations to support the reforms, including new and improved (here’s hoping!) disclosure regulations. We expect these to be available for consultation later in the year. The Skills Organisation is also set to review the content of the Level 5 New Zealand Certificate in Financial Services to align with the reforms.
More significantly from a regulatory framework perspective, the Code Working Group has now commenced its work on developing a new Code of Conduct. We can expect that Group to release papers for consultation in October/November. We will be monitoring its work closely over the months ahead, and will discuss its mandate in more detail in a future edition of our Financial Law Insight series detailing the reforms.
Start a conversation
If you would like a specific briefing on the Bill, what the proposed reforms may mean for your business, and what you can do now to plan for the new regime, please contact Catriona Grover, David Ireland, Hayley Miller, Nick Summerfield, Karen Mace, Tom McLaughlin or email the team at email@example.com.
If you don’t want to receive our special series of Financial Law Insightsdetailing the financial advice regulatory reforms, please let us know and we will remove you from the list of recipients for that. No need to worry about missing out on the other stuff - unless you tell us otherwise, we will leave you on the main Financial Law Insight database so you can continue to receive our updates on other topical financial markets issues as they arise.