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New Zealand sets March date for new advice regime

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New Zealand has set March 15 next year as the start date for its new financial advice regime that is designed to improve transparency and outcomes for consumers.

The new system was to have commenced today, but due to the virus pandemic disruption the Government decided to delay its introduction to let advisers focus on helping clients affected by the public health crisis.

At the same time, the Government has also announced a set of disclosure rules that advisers will have to comply with under the new regime. Businesses and individuals who give financial advice must disclose to clients important information such as the fees they charge, possible conflicts of interests, the range of products they advise on and how to access dispute resolution services.

They must provide these information at different stages of the advice process, including on the company's website, during client meetings and during any complaints process.

“The disclosure requirements are set in regulations under the Financial Services Legislation Amendment Act, which introduces a new regulatory regime for financial advice,” said Sharon Corbett, the Manager of Financial Markets at the Ministry of Business, Innovation and Employment Financial Markets.

“They are intended to improve transparency and help consumers with important decisions such as choosing where to get financial advice.”

The Financial Markets Authority (FMA) has urged advisers to start applying for their transitional licences and plan for the switch to the new regime.

“We recommend advisers who intend to obtain a transitional licence file their application as soon as they are ready, ideally before the end of the year as a contingency,” FMA Director of Market Engagement John Botica said.

“That way, you won’t be under pressure just before the regime begins and will have time to prepare for your new obligations.”

The FMA has granted 850 transitional licenses, representing an estimated 6500 financial advisers.

The advisers’ peak body Financial Advice New Zealand has welcomed the revised March 15 start date. It will run a webinar on Friday and master classes at its September 21-24 conference to help members understand and prepare for the changes.

“We know that between now and March 15 there is a lot to work through, to understand and to implement,” CEO Katrina Shanks said. “We note there are no transitional provisions given so there will now be more than eight months until the new regime commences.”

She says Financial Advice NZ supports the disclosure requirements that must be observed by advisers.