New financial advice rules will put consumers first
- New financial advice rules come into effect this week
- All financial advisors will require a licence and sign up to a Code of Professional Conduct
- Advice given online (e.g. robo-advice) is subject to the same rules as advice delivered in person
Consumers seeking financial advice can be assured that their interests will be put first under a new financial advice regulatory regime that comes into effect this week, Commerce and Consumer Affairs Minister David Clark said.
“We know many New Zealanders have been doing it tough financially due to COVID-19. For example, a Commission for Financial Capability survey during the nationwide Level 4 lockdown found that 66 per cent of New Zealanders were financially exposed or in difficulty. This means it’s more important than ever that Kiwis are getting financial advice that puts their interests first.
“Financial advice plays an important role in helping New Zealanders achieve significant milestones in their life, such as saving for a first home or planning for retirement. And we know that those who get financial advice achieve better financial outcomes.
“The new regime will give consumers greater confidence to seek advice that will help with their financial goals, providing them with greater trust in the quality of that advice.”
A key requirement of the scheme is that now all advisers must adhere to a new Code of Professional Conduct, which sets standards of competence and professional conduct.
“Advisers will also be required to operate under a licence granted by the Financial Markets Authority.
“The changes will increase transparency by requiring financial advisers to disclose any conflicts of interest, commissions they are paid, and limits on the companies or products they advise on.
“The same basic protections for consumers will apply regardless of how they choose to access financial advice – whether that be in person or online.”
David Clark said this is part of the Government’s wider work to strengthen consumer confidence in the financial services sector. This includes changes to the broader conduct of financial institutions, which will complement the new financial advice regime.
“The changes to financial conduct will work alongside the improvements to financial advice to ensure consumers can have confidence in the financial services sector.
“Introducing a new financial advice regime has been a major undertaking. I want to thank the financial advice sector for their continued input into the development of an improved regime that will better serve the interests of people seeking financial advice, helping them navigate difficult financial decisions and plan for their future.”
The new financial advice regime will come into effect on 15 March 2021 under the Financial Services Legislation Amendment Act.
More information about the new financial advice regime is available on the Financial Markets Authority website