by Rob Hosking
The Task Force on Regulation of Financial Intermediaries is considering submissions made on its options paper – but some form of co-regulation model looks likely.
Several industry bodies have been asked to put together proposal on what a co-regulatory approach could look like.
The Financial Planners and Insurance Advisers is suggesting a model with different bodies covering, respectively, consumer credit; investment; personal insurance; and general insurance. There are several industry bodies which could cover each of those areas, says FPIA chief executive Philip Matthews.
Under a co-regulatory model the government – through the Securities Commission or some other agency – would accredit industry bodies who would then act as regulators.
Financial intermediaries would enforce rules around competency and professional development standards, ethical standards, and financial strength.
Financial intermediaries would have to belong to one of the self-regulatory organisations (SROs).
Matthews says compulsory membership not only provides the consumer with greater protection directly, it also means the SRO has the financial and regulatory clout to enforce the rules.
One issue yet to be resolved is how professionals such as lawyers and accountants who also give financial advice would be covered.
The Task Force is looking very hard at a co-regulatory approach, he says, but it is still a long way from being clear that this is the panel’s preference.
The Task Force is due to report in late July – which is getting close to the election. “They have to convince the Minister of Commerce anyway, so we’re a long way off from knowing where this is going to go,” says Matthews.
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Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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