The changes, outlined today as part of the Review of Financial Providers and Products, are designed to improve consumer confidence and governance of the non-bank sector.
Most of the options for reform contained in the discussion documents released today were developed in conjunction with advisory groups made up of industry participants.
Commerce Minister Lianne Dalziel says there is “a host of legislation in the non-bank financial sector that has been developed in different decades and centuries, creating confusing or conflicting objectives, gaps in the regulatory regime and inconsistencies of regulatory treatment for similar products.”
"The current regulatory regime in many cases has led to unnecessary compliance costs and inefficient regulation that is impeding business operation and innovation. In some areas consumer protection is not as effective as it should be," she says.
The proposals are also designed to help New Zealand meet international obligations with regards to the financial services sector.
Some of the most important elements of the discussion documents include plans to register all companies which provide financial services products. This process would be done by the Registrar of Companies.
However each organisation would then come under another regulator.
One of the biggest changes is in the deposit taking sector where there are plans to create two types of firm, one an Approved Deposit Taker and the second, less onerous one is labelled the Enhanced Trustee Model. (More details will soon be available at www.depositrates.co.nz).
The proposals also include stricter rules for trustees and platform and portfolio management providers. Ministry of Economic Development chief executive Mark Steel also outlined options for consumer redress.
He said the current arrangements were patchy with some sectors of the advisory industry covered. Options for change include one ombudsman scheme for all the industry or maybe a set infrastructure with several ombudsmen schemes.
The discussion documents released today cover:
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