The New Zealand Government will expect financial advisers to act in clients’ best interests and introduce a code of conduct under proposed new legislation.

It aims to improve access to high-quality financial advice and wants to establish a regulatory level playing field for advisers.

The proposed legislation abolishes the three designations for advisers and replaces them with “financial adviser” and “financial advice representative”.

All individuals and robo-advisers must meet the best-interests requirement, and the latter must be licensed by the Financial Markets Authority (FMA).

Definitions of class and personalised advice, and different categories of products, will be removed.

The Government also wants more meaningful disclosure requirements for advisers, including disclosing commissions during the advice process.

Licensed businesses will be subject to the Financial Markets Conduct Act’s compliance and enforcement tools such as civil pecuniary penalties, licensing actions and criminal offences.

But the Financial Advisers Disciplinary Committee will be retained to examine breaches by individual advisers. The Government says it is consulting on whether financial advice providers should also be subject to the committee’s oversight.

The Government is consulting with the industry and consumers about transition arrangements for advisers.

It expects the new code of conduct to be approved by August next year and the new legislation to take effect six months after that. Advisers will have a further two years to meet any new competence, knowledge and skills standards set out in the code.

Advisers will initially have transition licences, and the process and requirements for a full licence will be determined by the FMA.

Consultation on the draft bill and transition requirements closes on March 31.

“The current regulation of financial advice is seen to be overly complex and has imposed regulatory barriers that are preventing people from receiving the advice they need,” Commerce and Consumer Affairs Minister Jacqui Dean said.

“It is important we strike the right balance between realising the benefits of the new regime and allowing time to meet the new requirements.”

The draft bill and consultation documents can be found here.