The financial advisory reform program could be kicked a further six months or more down the road as the new Labour-led government prioritises other legislative initiatives.
Notably absent from Labour’s 100-day ‘action plan’, the Financial Services Legislation Amendment Bill (FSLAB) would not get a first reading before Christmas this year as flagged earlier, according to James Hartley, Ministry of Business, Innovation and Employment (MBIE) financial markets policy manager.
“It’s looking like [FSLAB] will get its first reading in the new year, which will have some flow-on effects,” Hartley said. “We’ve previously said the law would be passed by mid-2018 but it’s more likely now to be near the end of next year.”
In spite of the delay, he said the government would not shorten the proposed transitional period set for the advisory industry to adapt to new legislation.
“Things will shift out as needed,” Hartley said.
Under a previously-published schedule, the new financial adviser licensing process was slated to begin in November next year, three months after a new Code of Conduct is due for approval. However, work on the new Code would continue as planned.
The original MBIE timeline allows advisers a two-year transitional licensing period starting in May 2019 before all firms must hold a full licence approved by the Financial Markets Authority (FMA). Advisers would be licensed as entities under FSLAB rather than individuals as per the current Financial Advisers Act regime.
Based on the revised indicative FSLAB itinerary, the full law would probably go live near the end of 2021.
“There’s some uncertainty around those estimates but when the law is referred to the select committee we will issue further updates,” Hartley said.
However, he said the new Commerce Minister, Kris Faafoi, has publicly stated his commitment to ushering in the reforms to improve consumer access to financial advice.
“He’s said he is keen to keep working with the industry and consumers [on FSLAB],” Hartley said.
In the meantime, he said MBIE was nutting out some of the FSLAB regulation details including proposed disclosure documents advisers would be obliged to supply to clients under the coming regime.
“We will be consulting on the disclosure documents in the new year,” he said.