Financial advisers will likely enjoy more flexible disclosure requirements under proposals currently being drafted by the Ministry of Business, Innovation and Employment (MBIE).
Sharon Corbett, MBIE principal policy adviser, said there was broad agreement that disclosure under the in-progress Financial Services Legislation Amendment Bill (FSLAB) should be a more fit-for-purpose model than the current law allows.
Corbett said the draft FSLAB financial adviser disclosure regulations were still “a few months” away from consultation phase but the broad policy settings would accommodate different advice models.
“We definitely want to make sure that the disclosure regulations will work in different circumstances,” she said. “For example, disclosure has to cover advice given over the telephone or by robo-advisers as well as traditional face-to-face financial advice.”
It is understood regardless of their operating model, financial advisers in the FSLAB world would be able to develop their own disclosure formats rather than follow prescriptive templates as per the current approach. Authorised financial advisers (AFAs) must hand over detailed information to clients via two tightly-defined ‘schedule 1’ and ‘schedule 2’ disclosure documents.
One-size-fits-all disclosure would likely prove problematic given the impending FSLAB law – due to hit Select Committee phase this June – will apply across all financial advisers rather than the AFA subset.
In a note published late last year, legal firm Kensington Swan said since the FSLAB first draft was tabled in August 2017 “ a few cracks in what had been proposed, and some unintended consequences, have been identified”.
“We also have a new Government in power, no doubt eager to ensure that its mark is squarely stamped on the new regime,” the Kensington Swan note says. “What this means is that it is highly likely there will be movement on the detail of some of the key elements of the regime. Some of that movement might be pivotal for many stakeholders in finalising their strategies to respond to the reforms. The current submission process represents a final chance for financial advice providers to have a say in shaping their destiny.”
Interested parties have until the end of this week to lob FSLAB submissions for the Select Committee.
Corbett said MBIE was drafting a few other regulations for release along with the FSLAB regime (and concurrent updated adviser code) including new restrictions on use of the Financial Services Providers Register (FSPR).
She said MBIE was also considering prospective fees for financial advice firms under the impending law (which essentially corrals advisers under the Financial Markets Conduct Act).
“We haven’t determined what the [adviser] licensing fees will be yet,” she said.
Corbett leads the FSLAB regulation initiative with MBIE financial markets policy manager, James Hartley, recently seconded to an undisclosed project.