by Susan Edmunds
Submissions on the Financial Services Legislation Amendment Bill, currently being considered by select committee, close today.
The committee has until June 7 to report back to the house.
The bill introduces disclosure requirements for financial advisers of all types.
It says that those giving financial advice will have to disclose certain information to retail and wholesale clients – but the content, timing and manner of that would be prescribed in regulation and could differ from what is currently required.
An MBIE spokeswoman said it was still developing proposals for the disclosure requirements. They would then be released for consultation.
“The disclosure requirements will need to work in a wide range of different advice situations so that consumers can make informed financial decisions. We will consult on the proposals in the coming months and we want to hear the industry’s views.”
AFA disclosure was one of the concerns highlighted by the FMA in its most recent conduct outcomes report. It said it found instances where AFA disclosure statements did not comply with regulations.
It is expected that financial advisers will have the freedom to develop their own format for disclosure, rather than having to follow the prescriptive rules of the current approach.
At the moment, financial advisers have clearly defined disclosure documents that they must provide.
It has been suggested that RFAs may have to detail the commission they receive.
Gavin Austin, of ABC Compliance, said change was needed. "The old regime didn't tell anyone much."
He said it was currently often not possible to tell from disclosure statements whether an adviser was part of a vertically-integrated product provider or an independent.
A flexible approach was suitable, he said, as long as there were clear guidelines to the basics that needed to be included. "The differences in the four different disciplines are quite wide. The code will be more important in the sense of it prescribes conduct and process for those disciplines."
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