First clue on how new conduct rules will impact advisers

The much-awaited guidance on how new conduct rules will work with advisers has been released by the Financial Markets Authority.

Tuesday, February 21st 2023, 12:53PM

It has released a consultation paper on “intermediated distribution”.

The paper is particularly relevant for lenders working with mortgage advisers and insurance companies and risk advisers.

In the paper the regulator outlines its expectations as well as telling the sector what it does not expect.

It suggests that some companies are going too far in their oversight of advisers.

The FMA acknowledges the Financial Markets (Conduct of Institutions) Act (CoFI) and new financial advice regimes “are complementary with broadly consistent overarching policy objectives – both require the consideration of consumer interests in relation to the distribution of products and services.”

“The policy intention is that the dual regimes create a shared responsibility between financial institutions and FAP-licensed intermediaries for fair treatment and outcomes for consumers.”

It also recognises “that the flexibility provided by principles-based regimes such as CoFI can produce uncertainty.”

Its guidance is intended to provide financial institutions with confidence that they can design their fair conduct programmes in a proportionate manner that meets the CoFI distribution requirements without having unintended or unnecessary impacts.

“The guidance is non-prescriptive. We want financial institutions to have flexibility to design their own approaches.”

In a consultation paper, the FMA outlined its general expectations, saying the overall purpose of the guidance is to ensure intermediary arrangements are designed to promote fair outcomes for consumers.

“These arrangements need to clearly assign roles and responsibilities, and include processes for monitoring their effectiveness,” FMA executive director regulatory delivery Clare Bolingford says.

In its statement, the FMA said advisers needed to comply with the FAP regime as well as the Financial Markets Conduct Act 2013.

It said the CoFI requirements were complementary to these needs, with “broadly consistent overarching policy objectives.

“The policy intention is that the dual regimes create a shared responsibility between financial institutions and FAP licensed intermediaries for fair treatment and outcomes for consumers.”

Tags: CoFI