News round-up

Developments on disclosure requirements for advisers
A bill that simplifies the implementation of the Financial Advisers Act and reduces costs of implementation was introduced into Parliament last week.

The Financial Services Providers (Pre-Implementation Adjustments) Bill makes technical amendments to the Financial Advisers Act (FAA).

The bill also contains technical amendments to the Financial Services Providers (Registration and Dispute Resolution) Act.

Relief for employers helping out with super savings
Companies offering workplace savings assistance are not likely to be caught under the definition of a financial services provider, under proposed changes in the Financial Services Providers Bill.

There has been concern that current legislation does not distinguish between a real provider of financial services, such as a bank, and an employer who merely promotes a superannuation scheme for its employees.

"Left unchanged, such an employer would need to register as a financial services provider and join a disputes resolution scheme," Workplace Savings NZ executive director Bruce Kerr said.

Changes proposed in the bill will help exempt employers from the need to register and recognise that the financial service is actually provided by the trustee and manager of the scheme.

The protection that the legislation is designed to provide for scheme members should be achieved through trustees and managers being registered.

"Employers assisting their employees with their workplace savings arrangements will be relieved that unless they are truly in the business of providing financial services, or actually giving financial advice, there should be no need to register as a financial services provider," Kerr said.

First disputes resolution scheme application received
Financial Services Complaints Limited (FSCL) has become the first body to apply to set up a financial sector consumer disputes resolution scheme.

"Consumers need access to good dispute resolution," says Minister of Consumer Affairs, Heather Roy.

By the end of 2010 financial service providers - banks, finance companies, insurance companies, financial advisers, credit unions, mortgage brokers, money lenders etc - will have to be registered and must join a disputes resolution scheme.

They can join an industry-run dispute resolution scheme approved by the Minister of Consumer Affairs, or sign up to the government reserve scheme.

Roy expects to make a recommendation in the New Year to decide upon FSCL's application and is encouraging others to apply.

AIA selects Hong Kong as listing venue
AIA Group and American International Group (AIG) is planning to list on the Hong Kong Stock Exchange as part of pursuing its IPO of AIA.

"The announcement of Hong Kong as the venue for the proposed listing is important progress on our path to becoming a public company," said Mark Wilson, AIA chief executive and president.

"The timing of any offering will be dependent on market conditions and regulatory approval; we will only list when we are ready."

Comments from our readers

On 14 December 2009 at 8:38 am Barry Milner said:

Tied agency here we come, companies who through the stupidity of previous managements lost control of their distribution will regain it though government legislation. no wonder one large company has been telling advisers in regard to compliance qualification "do nothing, we don't know what is needed yet, so wait and see". Tied agency force regain by stealth. Very clever.

On 14 December 2009 at 3:01 pm Tied Agent said:

QFE employees and named representatives will be able to provide financial advice or conduct investment transactions in relation to products for which the QFE is the promoter under the Securities Act. Working for a Sales Manager again. Stuffing client portfolios with issuers products. Subsidised car loans, mortgage loans and superannuation. Being in the top 10 Salesman to receive overseas junkets, gift baskets and lavish lunches. White board recording and measuring everyone's performance. Tied Agency, bring it on, what a country.

On 14 December 2009 at 11:09 pm David Whyte said:

I'm not altogether sure how the development of a regulatory regime ever got so complicated! After the complexities of the UK Financial Services Act, I thought that Australia had gone to a further stage of intrusive and non-productive prescriptive compliance. However, I have to say that NZ takes the biscuit for complexity. The regimes overseas were/are tough, but they're not complicated. This playing around with QFE, AFA, RFA is nothing more than a macabre dance of utter futility. There will be casualties - some good people will be rounded up with the baddies and eradicated from the industry. Some poor advisers will be able to satisfy the compliance requirements, meet the standards set - and then promptly stitch up their clients for all they're worth. Ultimately, the consumer, for whose benefit all this regulation is supposed to be created, will be no better off than before the regime was installed. Indeed, looking at the UK experience, the costs appear to have far outweighed the benefits. The jury is still out on the Australian experience, but with Westpoint, Finance Company collapses, and similar, a familiar pattern is beginning to emerge of huge expense incurred - to little effect. Even in the mighty US of A, the so-called 'heavy' regulatory regime was completely unable to prevent the collapses of large corporate financial services companies so well documented elsewhere.
Regulation is inevitable - I suspect most people in the NZ industry accept that - but why oh why does it have to be so complicated???

Developments on disclosure requirements for advisers; Relief for employers helping out with super savings; First disputes resolution scheme application received; AIA selects Hong Kong as listing venue

Monday, December 14th 2009, 5:12AM 3 Comments

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