MED to look into overseas convictions loophole

The Ministry of Economic Development (MED) is aware a loophole exists that allows people with foreign convictions to become registered financial advisers and is "looking into the issue."

Monday, October 17th 2011, 7:04AM 1 Comment

by Benn Bathgate

"Under the Financial Service Providers Act individuals who are convicted of crimes overseas are able to register on the Financial Services Providers Register, without having to declare their convictions," said MED communications adviser Emilia Mazur.

"We are looking into the issue of taking relevant convictions from overseas jurisdictions into account and will provide advice to the Minister on this shortly."

Good Returns reported at the start of September that two Bay of Plenty advisers were accepted onto the Financial Services Providers Register despite court convictions in Australia for misleading investors.

Financial Markets Authority (FMA) chief executive Sean Hughes said the regulator was aware of the loophole but powerless to act as the Register is under the auspices of the Companies Office, part of the MED.

"The registrar has no discretion to refuse registration to somebody who holds a conviction from overseas, they can with a New Zealand conviction, but not with an overseas conviction," Hughes said.

He said that in its current form, the system was unfair "not only to advisers but to consumers who won't know if their adviser has an overseas criminal conviction or not."

The MED said that while the Financial Service Providers Act lists specific crimes that disqualify individuals from being registered, "these crimes are serious offences that are directly relevant as to whether a person should be able to provide financial services. Fair Trading Act offences are not specified as crimes that disqualify a person from being registered as a financial service provider."

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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Comments from our readers

On 17 October 2011 at 7:41 pm w k said:

Trust a committee or commission need not have to be set up, at the expense of the current advisors, to look into it.

Suggestion: All (regardless NZ Citizen or not) who want to be registered as an advisor but have not worked in / have been away from NZ for, say, the last 2 years or more, must provide police clearance and letter from financial industry authority in the country/ies where they last work / live, to certify they have not committed any offence, big or small.