by Rob Hosking
There are also requirements around the timing of disclosure.
One thorny issue is likely to be the dividing line between these categories. One proposal in the document seeks to make the line between product marketers and high-level intermediaries clearer.
Product marketers would have to disclosure a “health warning” which would “address the risk that some consumers may treat product marketers as providing a higher level of advice than anticipated.”
This warning could be in the form of a statement that the product marketer is “providing advice on a product from a particular provider, and that a consumer may wish to seek independent financial advice, or to consider options themselves.”
The document also proposes including real estate agents selling investment properties as financial intermediaries.
The Task Force proposed that all high level financial intermediaries would have to belong to an approved professional body (APB) which would act as a co-regulator backed by the Securities Commission.
The document suggests five categories: general insurance, life insurance, health insurance, mortgage broking, and financial planning.
One controversial issue already raised is whether single businesses can become an APB, if those businesses have internal standards and processes that are already very similar to what the government envisages for APBs. Banks and insurance companies have been suggested as the most likely to do this.
The document canvasses the pros and cons of this and although not coming down on one side or the other, the tone is clearly against the idea.
An alternative is proposed, whereby large single employer firms with high internal standards could take responsibility for their employees as some sort of “corporate member” of an approved professional body.
The deadline for submissions on the document is September 1.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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