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Advice bill faces year-long delay

New rules for financial advisers are likely to be delayed until the end of next year.

Thursday, November 30th 2017, 6:00AM 4 Comments

Sharon Corbett

It had initially been expected that the Financial Services Legislation Amendment Bill would be passed by parliament at the end of this year or early next.

The code of conduct for advisers was due to be signed off in the middle of next year, and advisers would be given six months from November 2018 to obtain a transitional licence. They would require a full licence in 2021.

But with a new government in power, that timeline has been thrown into question. The bill has been bumped down the work programme.

MBIE principal policy adviser Sharon Corbett told the Navigating Regulation Advice Summit that it was likely the bill would now not be passed until late 2018.

"My best guess is the bill will be passed at the end of next year,” she said.

The Government is working on its 100 day priorities at the moment and FSLAB isn't one of these. To progress the bill it needs to go to Select Committee hearings and that can only be done after its next reading in Parliament.

"Where our bill sits on the order paper we don’t know yet," she said.

Corbett says Commerce Minister Kris Faafoi "is really interested in these reforms."

She said the timeline would not be compressed. Originally, advisers were to have to obtain a transitional license from November 2018, and the regime would come into effect from May 2019, with full licenses required from 2021.

Corbett also said the bill doesn’t require advisers to join a big entity.

"A single adviser can get a licence," she said.

Code Working Group chairman Angus Dale Jones, who also spoke at the event, said the group had been running focus groups with various stakeholders and would produce some comments soon.

Under the new code competence, skill and knowledge would not be measured just by passing exams. 

IFA chief executive Fred Dodds was unconcerned. “Are advisers going to be disappointing in a delay in change? Probably not.”

He said it could give the industry more time to debate the issues.

The Code Working Group might also welcome the extra time, he said. So far its consultation has only been with focus groups.  It had said it would "consult on concepts" in October and November.

“They’ve got a lot of work to do, moving the code of professional conduct from 1800 people to 35,000.”

Tags: Angus Dale-Jones code working group conduct financial advisers Financial Services Legislation Amendment Bill Fred Dodds FSLAB IFA Kris Faafoi MoBIE regulation

« DIMS advisers face uncertainty... againWorking group outlines new code's principles »

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Comments from our readers

On 30 November 2017 at 10:14 am Brent Sheather said:
Despite the rhetoric the Code of Conduct chatter is just a sideshow. The actual Code of Conduct is determined in the boardrooms of the banks and the overarching objective is “maximise profits for as long as we can”. Some specifics of the bank Code of Conduct include “extract as much as possible from clients, vertically integrate so as to capture as much of the scam for ourselves as possible, publicly state we are doing the right thing, say fees aren’t important, say we outperform (but provide no facts). Never publicly criticise the FMA or the MBIE and if you do have any issues we have specific private channels to both organisations where we can have informal discussions. If appropriate and you are authorised hints of job offers and directorships may be appropriate.”
On 30 November 2017 at 10:18 am Murray Weatherston said:
The lack of urgency (actually it's not even as strong as urgency) seems to me to be one more manifestation of something I have been banging on about for ages "what exactly is the problem that this legislation is designed to solve?"
It was originally a National Bill; Labour in opposition didn't even seem to be very interested (e.g. almost complete absence of comment. Robert and I did visit the Labour spokesman, but never heard back).
Surely relations in parliament aren't so strained and toxic that the two biggest parties couldn't agree to co-operate and give this Bill (and no doubt other Bills in this same hiatus) a very swift First Reading and reference to Select Committee? The First reading is the kick-off date and is more procedural - unlike 2nd readings and Committee stages which are substantive.
Or is the subject matter really not all that important after all?
On 30 November 2017 at 10:44 am Pragmatic said:
It's a fair call Murray, and perhaps a useful juncture to go back and revisit the question: "what exactly is the problem that this legislation is trying to solve?"

Unfortunately the 'engine' now has developed a head of steam, making any 'pause & reflect' moments difficult to instigate...
On 30 November 2017 at 11:42 pm Murray Weatherston said:
This story might turn out to be pessimistic. FSLAB rocketed up from No 21 on the Government's Order Paper on Wednesday to No 6 on Thursday (today). The power and influence of Good Returns, perchance?

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