Cabinet makes key decisions on finance sector laws

Cabinet has this week made key decisions about the implementation of the Financial Advisers Act and the Financial Service Providers Act which were both passed into law in 2008.


"The Acts are important measures to rebuild mum and dad investor confidence in the financial sector which has been shaken by finance company failures and the global recession," Commerce Minister Simon Power said.


Key decisions made by Cabinet allow for regulations to be developed, stating:
 

• The exact content of disclosure that financial advisers will have to make to clients.
• The registration and authorisation fees charged to financial service providers and financial advisers.
• The fees charged to financial service providers and financial advisers.
• The form of the new register of financial service providers.

"The new disclosure regulations will require financial advisers to clearly disclose key information, such as what their fees are, whether there are any limitations on their services, and whether they have any conflicts on interest."


The disclosure regulations are on schedule to be gazetted in April.


"This work forms part of the Government's wider programme to fix the financial system, with other work in train on capital markets, trustees, moratoria and auditors," Mr Power says.


Cabinet has also given policy approval for amendments to the way investment transactions are regulated under the Financial Advisers Act.


The present regime allows only individuals to undertake them, creating significant compliance costs for businesses. Under the proposal, entities will be able to undertake such transactions, provided they are registered and adhere to minimum standards of conduct.


Mr Power will write to the Commerce Select Committee shortly to ask it to consider the proposed amendments around investment transactions as a part of its consideration of the Financial Service Providers (Pre-Implementation Adjustments) Bill, which amends the two Acts. This will give the public time to submit on the new proposals.


"I'm confident the proposed regime for investment transactions will provide safeguards to consumers, while being more appropriately fitted to current market practice.


"It's critical that industry gets involved in the committee's consultation to ensure we have legislation that is effective."


The relevant Cabinet papers are available at: http://www.med.govt.nz/fin-int