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Details Of Finance Advisers Regulation Announced

Contributor:
Fuseworks Media
Fuseworks Media
Simon Power
Simon Power

Wellington, Feb 26 NZPA - Final decisions on the details of regulation of financial advisers have been released by Commerce Minister Simon Power.

The Government has been working on the regime since millions of dollars were lost by mum and dad investors based on poor financial advice urging them to put money into risky investments.

"The new disclosure regulations will require financial advisers to clearly disclose key information, such as what their fees are, whether there are any limitations on their services, and whether they have any conflicts on interest," Mr Power said.

The Financial Advisers Act and the Financial Service Providers Act were passed into law in 2008 but the exact nature of how the regulation would work has been subject to a long consultation process.

"The Acts are important measures to rebuild mum and dad investor confidence in the financial sector which has been shaken by finance company failures and the global recession," Mr Power said.

Decisions made by Cabinet allow for regulations including:

* The exact content of disclosure that financial advisers will have to make to clients.

* The registration and authorisation fees charged to financial service providers and financial advisers.

* The fees charged to financial service providers and financial advisers.

* The form of the new register of financial service providers.

The disclosure regulations are on schedule to be gazetted in April.

"This work forms part of the Government's wider programme to fix the financial system, with other work in train on capital markets, trustees, moratoria and auditors," Mr Power said.

Cabinet has also given policy approval for amendments to the way investment transactions are regulated under the Financial Advisers Act.

The present regime allows only individuals to undertake them, creating significant compliance costs for businesses. Under the proposal, entities will be able to undertake such transactions, provided they are registered and adhere to minimum standards of conduct.

Mr Power said he would ask the commerce select committee to consider the proposed amendments around investment transactions as a part of its consideration of the Financial Service Providers (Pre-Implementation Adjustments) Bill, which amends the two Acts.

"It's critical that industry gets involved in the committee's consultation to ensure we have legislation that is effective."

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