Financial advisers welcome bill to improve financial service

2 December 2019

Financial advisers welcome bill to improve financial services, products and conduct

Financial Advice NZ welcomes the introduction of the Financial Markets (Conduct of Institutions) Amendment Bill into Parliament.

“This bill is designed to improve the services and products provided to consumers by banks, insurers, non-bank deposit takers, advisers and brokers, and should be welcomed by the whole sector,” says Chief Executive Katrina Shanks.

“Financial Advice NZ’s members are right behind anything that prioritises customers’ interests to ensure they can access quality advice and products.

“I’m confident the new regulatory regime that will flow from this legislation will provide additional focus for institutions on the principles of fair conduct and how to apply them, by introducing systems to identify, manage, and remedy conduct issues.

“The move to bring institutions under a fair conduct regime that ensures consumers are treated fairly, starting from the early design of products and services right through to the claims process is very timely because the end user must always be at the centre of product design and suitability.

“And while there’s a duty on product providers to ensure their products will likely lead to good customer outcomes, financial advisers will also play their part when they’re delivering those products.

“We were pleased to see the carving-out of Financial Advice Providers from this legislation to allow the implementation of the Financial Services Legislation Amendment Act, which also has a strong emphasis on treating clients fairly.

“We believe there are areas in the bill that require further clarification and can be improved. For example, the intent of the bill is to exclude the advice process; the drafting of the bill excludes the Financial Advice Provider entity, while it is unclear whether the adviser is excluded under this classification.

“We would like to see the definition of fair conduct included in the bill so it can be easily identified by consumers.

“We also note the bill contains a power to prohibit or regulate the offering or giving of sales incentives for some products. In principle, this is a good idea because we recognise that from time to time this has sent incorrect messaging to those providing advice. However, we will be submitting to the select committee on the processes and controls that need to be in place to ensure New Zealanders can continue to access financial advice.

“In Financial Advice NZ’s submission on the Options Paper we supported the idea of making institutions and intermediaries subject to the Financial Markets Conduct Act’s compliance and enforcement tools, and giving protection to whistleblowers, and we’re pleased those provisions are also in the bill.”

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