Little for advisers to fear in new Financial Markets Bill
While some parts of the Government's recently released Financial Markets Conduct Bill overlap with the Financial Advisers Act, advisers shouldn't be worried they will be facing another raft of regulatory changes.
Friday, August 12th 2011, 7:17AM
"From the purely advisory [point of view] I don't think that it's ramping anything up beyond the Financial Advisers Act in terms of disclosure obligations or liability obligations," said Chapman Tripp partner Geof Shirtcliffe.
The 400-page draft Bill has been released as part of Government efforts to reform securities law and includes measures to reform issuers prospectus' and investment statements, licensing regimes for financial sector participants such as fund managers and civil pecuniary penalties of up to $5 million for misleading disclosure statements and adverts.
The Bill also gives the Financial Markets Authority (FMA) "the power to require persons currently licensed under the FAA or exempt under that Act to be licensed under this Bill."
KiwiSaver providers also face a number of changes in the Bill regarding their management duties, licensing of scheme managers and KiwiSaver transfers.
One area of the draft Bill Shritcliffe said does relate to advisers is around discretionary investment management services (DIMS).
"One of the carve outs from the disclosure requirements they expanded is the habitual investor exemption from the need for a prospectus, for an offer to a limited group of people. One of the express inclusions is QFE or an AFA, so someone who's an AFA, issuers will be able to offer financial products to AFAs without having to make any compliance to disclosure requirements."
However, Shirtcliffe said that AFAs would still be bound by their own disclosure rules when it came to the investments in question.
"That doesn't mean that the AFA can then be a conduit to flick it out to mums and dads," he said.
"In terms of whether there's anything to worry about, yes, in the sense that there's more change that you're going to have to get your head around. Other than that, not from a purely advisory perspective I think."
Copies of the draft Bill can be found on the MED website at: http://www.med.govt.nz/templates/ContentTopicSummary____46200.aspx
Submissions are due by September 6.
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