New financial adviser legislation bringing the industry largely under the aegis of the Financial Markets Conduct Act (FMC) will be in Parliament some time next month.
James Hartley, Ministry of Business, Innovation and Employment (MBIE) head of financial markets, said the Financial Services Legislation Bill (FSL) was on track to be tabled in Parliament mid-July despite a complex drafting process.
Hartley, who has shepherded the FSL from inception, said the draft bill faced a significant number of technical issues and sustained “quite a few tweaks” since the final consultation ended on March 31.
“But there’s been no significant deviation from a policy perspective,” he said.
Meanwhile, last week Commerce Minister Jacqui Dean also confirmed membership of the Code Working Group (CWG), charged with designing the replacement adviser code of conduct, with former Securities Commission supervision director, Angus Dale-Jones, claiming the chair role.
Dale-Jones, who was instrumental in creating the current set of adviser regulations, said the CWG would consult broadly as it prepared the code for an impending wider audience.
Only about 1,600 or so authorised financial advisers (AFAs) are subject to the current code of conduct. However, the revised code – to be drafted by the CWG over the 12 months to August 2018 – would capture all those designated under the new law, including insurance and mortgage advisers as well as the army of institutional employees now acting under qualifying financial entity (QFE) status.
“The new code significantly changes the context,” Dale-Jones said. “The existing document is more like an occupational code, whereas the new adviser code will be consumer-focused.”
He said the new code and enabling legislation would not entirely dismantle the existing adviser regulatory architecture.
“To some extent we’re building on the earlier [adviser regulations], we’re just broadening the conversation,” Dale-Jones said. “Since 2008 [when he helped design the current adviser regs] both technology and the expectation of what human advisers should deliver has changed.”
The CWG also includes as industry representatives: John Berry, Pathfinder Asset Management director; Graeme Edwards, ASB Bank general counsel; Paul Mersi, independent consultant; Rebecca Vanderbom, Milford Asset Management head of financial advice; Shayne Edmond, Forsyth Barr head of private client services; and, Therese Singleton, AMP sales and advice general manager.
Barbara Benson, former Education Council of New Zealand teacher education manager, and Brian McCulloch, Utilities Disputes independent director, represent consumers “and/or dispute resolution” on the CWG.
Edmond is the sole survivor from the current Code Committee, chaired by Kensington Swan partner, David Ireland.
Last week the current Code also faced a stern test with many complaints lodged by the Financial Markets Authority (FMA) against an anonymous adviser dismissed at a Financial Advisers Disciplinary Committee (FADC) hearing.
In a FADC finding published last Friday, the unnamed adviser was found in breach of two Code Standards (CS) regarding the NZ end of a UK pension transfer and related insurance advice.
The adviser was found in both instances to have breached CS 6(a) and CS 12, which refer to competence in providing services and keeping written records, respectively.
However, the more substantive Code breaches alleged by the FMA (the sole complainant) including CS1 (client first) and CS2 (bringing the industry into disrepute) were not made out.
Both parties were requested to make further submissions on “what, if any, action” the FADC should take with all documents to be lodged by July 28.