New paper on regulating advisers out

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The Securities Commission has announced its proposal to regulate financial advisers by late next year and is seeking submissions on the draft regulation.

Thursday, June 18th 2009, 4:07PM

The Securities Commission has announced its proposal to regulate financial advisers by late next year and is seeking submissions on the draft regulation.

The staff paper outlines the wider regulation and supervision of advisers, and has a particular focus on the "principles underpinning the supervision of advisers" and on qualifying financial entities, the regulator said in its report.

The paper raises a number of questions for submitters around the compliance and supervision of QFEs, which it expects will be responsible for a significant number of advisers.

"These proposals are relevant to thousands of people working in the financial sector, affecting all businesses that give recommendations, opinions or advice about investments, insurance or credit products," Commission Director of Supervision Angus Dale-Jones said in a statement. "The key objective is to promote high standards of professionalism and integrity for all financial advisers."

The government allocated an extra $12 million over four years for the Securities Commission to implement the regulatory body in last month's budget, and earlier this year provided some confidence for the industry when Commerce Minister Simon Power appointed Annabel Cotton as the interim commissioner for financial advisers.

In the paper, the Commission asks submitters to comment on the interpretation of financial planning services, which it recommends as being "more than merely doing a basic needs analysis for a particular product or combining two products where one product is ancillary to the other." Only an authorised financial adviser will be able to offer financial planning services.

The regulator admits if its definition is too broad, advisers allowed to sell category two products could fall foul of the law if they said anything about category one products to their clients.

Submissions on the paper close on July 31.

DOWNLOAD the paper here

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