Task Force Recommends Changes for Financial Advisers and Marketers

Michael Webb, Chair, said the Task Force did not see the industry as being in crisis but that there definitely is a case for change. "The issues we have identified do undermine the market's ability to function effectively, and the confidence of consumers in that market. Properly addressed they would, in our view, significantly contribute to a better functioning industry and better opportunities for consumers and intermediaries."

"The Task Force is confident we have recommended a balanced set of reforms, taking into account the need to have a regime where consumers can be confident in the advisers they deal with. This in turn can assist consumers in making quality and informed decisions, and encourage greater use of financial intermediaries where it is appropriate to do so."

In formulating its recommendations the Task Force has also been concerned that any reforms should be workable, proportionate and cost effective, and that the regime should be one best suited to New Zealand, having regard to both domestic and international considerations.

Key changes recommended in the report include:

- easy access to straightforward and effective dispute resolution and enforcement facilities;
- where an intermediary breaches obligations, a disciplinary process with effective sanctions including, where appropriate, removing the intermediary from practice;
- clear and concise disclosure of intermediary functions, obligations, and remuneration;
- requirements for intermediaries to comply with appropriate standards relative to their functions;
- a requirement for intermediaries who are personal financial advisers to be members of an approved professional body; and
- consumer literacy education and information.

The Task Force is proposing a co-regulatory regime to implement these measures.

"We're recommending different obligations for intermediaries depending on the service they are providing to the consumer," said Webb.

"We see this as very important. We don't want to place obligations where the benefits would exceed the costs or where they would be out of proportion to the service the intermediary is providing. To be effective, we believe the regime should be broad in its coverage, but not a 'one size fits all' approach in its application."

Webb added that while the core recommendations by the Task Force focus on the regime the intermediaries themselves should operate under, the Task Force was also concerned with the wider context.

"Consumer education initiatives and product disclosure are key to a successful financial service industry and we have accordingly identified some issues and recommended some changes in these areas."

The report follows wide consultation with consumers, industry, and other interested parties The report comments that there has been a high degree of convergence of views from both industry and consumers as to the issues needing to be addressed and, now, broadly what that change should entail. Webb said "If our recommendations are accepted by the Government, we believe it important that they be advanced and implemented expeditiously so as to build on the support and momentum for reform".

The report has been presented to the Minister of Commerce Pete Hodgson who will consider the Task Force's recommendations.

The Task Force members are Michael Webb (Chair), John Cobb, Angela Foulkes, Raewyn Fox, Paul Hunt, Ross Kent, Michele Stanton, and Peter Mumford (Ministry of Economic Development Official).

Feature: Financial Intermediaries Taskforce Report Welcomed
Commerce Minister Pete Hodgson today welcomed the report of the Financial Intermediaries Task Force. [more]

News: Task Force opts for Co-Regulation
New rules and a single disputes resolution body have been recommended by the government’s Task Force on Financial Intermediaries. [more]

View the Final Report
Confidence, Change and Opportunity: Final Report of the Task Force on Financial Intermediaries [981 KB PDF] [more]

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Have your say at the ASSET Magazine forum at www.assetmagazine.co.nz. It’s easy to use, free and anyone can read the posts. [more]

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