by Rob Hosking
AMP Financial Services has warned the changes put too much emphasis on written advice to investors and Telecom says the bill adds costs to its human relations and investor relations activities.
AMP told the commerce select committee – which will report on the bill by the end of the month – that “the vast majority of existing security holders…prefer to do business with issuers and advisers over the phone.”
Requirements in the bill to provide disclosure up front and in writing are “impractical,” AMP executives told MPs.
It also notes that the bill allows for regulations requiring investment advisers to have a minimum level of professional indemnity insurance.
This is only an option at this stage, but it means a future government could issue regulations, without going through Parliament, putting such a requirement on investment advisers.
That sort of requirement “needs to be carefully integrated in overall adviser and intermediary developments”, AMP says.
And in a more general sense, AMP – as other submitters have done – told MPs the government should wait until the Task Force on Financial Intermediaries reports back in the middle of the year before making law changes which cut across this area.
The Telecom submission points to the sort of issues likely to face government and business if and when any workplace savings regime gets under way.
Telecom warned that the company’s HR department regularly circulates material relating to the company’s employee incentive schemes.
“There would be little benefit to the market if Telecom’s…human resources staff were required to comply with the investment advisor disclosure requirements contained in the bill.”
In a pointer to possible solutions, Telecom notes the Securities Commission has the power to designate certain people exempt from investment advisor disclosure requirements.
“Employees who give investment advice as an incidental part of their employment functions [could] be exempt from the disclosure requirements proposed.”
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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