Glut of documents could hinder due diligence, IFA says

The glut of documents requiring submissions on the regulation of financial advisers could impact on the level of diligence, according to the Institute of Financial Advisers.

Friday, July 3rd 2009, 7:42AM

by Paul McBeth

The Securities Commission has called for submissions on disclosure regulations for financial advisers in the latest round of papers on the legislation, but IFA president Lyn McMorran raised concerns about the number of documents requiring submissions and the time available to do so.

"It's not a lot of time to give the due consideration it needs," McMorran said. "The anti-money laundering legislation will have an effect on most of the industry, and we'll want to make a submission on that as well."

Along with the Ministry of Economic Development's discussion paper on disclosure, there's also the Securities Commission's staff paper, and the Ministry of Consumer Affairs' consumer advice document. Submissions on the documents close within two weeks of each other.

The MED document recommends information be given to clients before any advice is offered, although it concedes it can be "difficult to comply with this obligation while still providing an effective service" and allows for disclosure to occur after the fact if it isn't practicable beforehand.

The Ministry's paper proposes a regimented disclosure process whereby advisers have a number of headings to let them tick off all the information they need to pass on to their clients.

Minister of Commerce Simon Power hopes the new disclosure regulations will be in place early next year.

The Securities Commission put out a staff paper outlining the wider regulation and supervision of advisers last month, with a particular focus on the principles underpinning the supervision of advisers.

Legislation for the wider financial adviser sector is scheduled to be completed by December 2010.

Paul is a staff writer for Good Returns based in Wellington.

Tags: Disclosure financial advisers IFA regulation