Cabinet agrees to change financial adviser regime

Cabinet agreed today to policy changes in relation to the financial adviser regime, and has invited the Commerce Select Committee to consider them.

The committee is considering the Financial Service Providers (Pre-Implementation Adjustments) Bill, which makes amendments to the Financial Advisers Act 2008.

The proposed changes would:

• Greatly reduce the obligations on advisers to wholesale clients such as institutional investors, large companies, and highly sophisticated individuals.


• Allow institutions that operate as groups of related companies to use the ‘qualifying financial entity' model efficiently.


• Allow companies to issue generic advice such as brochures in their own name.


• Increase the powers of the Securities Commission to grant limited exemptions from the regime.


• Increase the Government's ability to give total exemptions from the regime through regulations.

"These proposed changes will make a big difference for industry members working to comply with the new financial adviser regime, while maintaining high standards for investors," Mr Power said.

"These amendments will target the regime in the areas of the financial adviser industry that are most in need of increased oversight, will allow firms to provide advice efficiently, and will future-proof the regime.

 "We need to ensure that those people who do not need the comprehensive protection of the regime are not unduly burdened, while minimising the risk that the definition creates a loophole for unscrupulous advisers.

"I invite the select committee to consider this matter in particular."

The committee is scheduled to report the bill back to Parliament in May.

A copy of the Cabinet paper can be found here