Adviser prospecting restrictions loosened

Proposed regulations targeting “unsolicited offers” of financial products have been changed after an outcry from the financial adviser industry.

Wednesday, September 12th 2012, 6:36AM 3 Comments

by Niko Kloeten

Concerns were raised earlier this year about section 71 of the Financial Markets Conduct Bill, which allowed authorised financial advisers (AFAs) and qualifying financial entity (QFE) advisers to approach only existing or former clients with offers of financial products.

The section came under fire from financial advisers, who feared it would severely curtail their ability to prospect for new clients.

However, the Select Committee has recommended changing the section to allow offers made “through an authorised financial adviser or a QFE adviser who is acting in the ordinary course of business as a financial adviser.”

Chapman Tripp partner Tim Williams said he was pleased to see the concerns raised earlier in the year about section 71 of the Bill had been addressed for AFAs and QFE advisers.

“The Select Committee have responded sensibly to the submissions on this point. However telemarketing, stall offerings and any other unsolicited ‘meeting’ offerings by other persons of retail financial products (debt, equity, KiwiSaver and other managed investment products, derivatives and any other financial products identified in Regulations) will still be prohibited.

“The change will provide a further incentive for financial advisers who sell these types of products proactively to become either AFAs or QFE advisers.” he said.

He said “Replacing the ‘existing or former clients’ restriction on AFA and QFE advisers with an ‘ordinary course of business’ limit had effectively resolved potential problems created by the previous version of the Bill for AFAs and QFE advisers”.

“Most of their unsolicited marketing should be in the AFAs’ or QFE adviser’s ordinary course of business”.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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Comments from our readers

On 12 September 2012 at 9:55 am Mac said:

Common sense prevails. I would be interested to learn who was actually responsible for drafting the original "unsolicited offers" wordings. Senior staff of a government ministry or their consultants? It is an outrage that these people were so out of touch with reality.

On 12 September 2012 at 11:05 am Dirty Harry said:

“Financial advisers who proactively sell only insurance policies, and who are not AFAs or QFE advisers, will hope that their policies are not included by Regulations within the ambit of this provision.”

Indeed we will. Yet another handout to QFEs promoting/allowing the continuation of terrible advice being spewed by bank tellers, and a head wind for RFAs. Not quite common sense prevailing, more a step in the right direction.

On 12 September 2012 at 12:13 pm Amused said:

In total agreement with both Mac and Dirty Harry's comments above.

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