Adviser regulation by stealth?
Some Australian fund managers are telling advisers in New Zealand they will no longer pay trail commissions on existing business, nor accept new money unless the adviser has an Australian licence.
Wednesday, February 25th 2004, 3:59PM
These letters are being sent out in the run up to the introduction of the new Financial Services Reform legislation which is due to come into effect on March 10. From that date Australian funds and advisers need to be licensed to provide financial services.
The letters have caused some confusion in the New Zealand market place about whether Australian managers can promote their funds in New Zealand through unlicensed advisers. Also the letters have come as a surprise to the local representatives of some of these managers.
Australian Securities Commission and Investments Commission FSR head Pauline Vamos says it appears these are form letters generated by Australian fund managers and sent to all advisers they have done business with, rather than targeted communications.
BT Funds New Zealand marketing manager Gordon Noble-Campbell says the letter was sent out inadvertently and advisers don’t need to panic.
Currently BT is clarifying the implications, if any, of the regulations for New Zealand advisers and intends to provide an update shortly.
"The letter was not intended to be mass distributed in New Zealand," he says.
BT plans to communicate with its clients soon on this issue.
Vamos says it is unlikely that New Zealand advisers need to be licensed. She says if the financial service is being provided in New Zealand it is beyond the scope of the Australian law.
"We don’t have jurisdiction in New Zealand," she says.
There has also been some confusion about whether New Zealand advisers can give advice to clients who may have moved to Australia. There is a view that the New Zealand adviser, in cases like this, would need to be licensed.
However, ASIC says that is not the case.
An adviser only needs to be licensed if they are operating a financial services business in Australia. Vamos says this has been interpreted to mean that the adviser has an office in Australia and is touting for business.
She says a New Zealand adviser with a couple of clients across the Tasman is not in the business of providing financial services in Australia.
"If you are touting for business here...yes you will need a licence," she says.
ASIC put out a ruling on this matter which can be viewed here
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