Task force releases paper on options for change

Media Release

23 May 2005

Task force releases paper on options for change for consultation

A consultation paper released today by the Financial Intermediaries task force sets out the issues the task force has identified from its first round of consultation and looks at options to address those issues.

Task force chair Michael Webb said responses to the task force’s issues phase consultation were generally in support of some change to the regulatory regime and that key themes emerged.

“What we’ve done now is looked at those themes emerging from the various responses we received and set out a range of options to address them,” Mr Webb says.

“We do not believe this is an industry in crisis but we do believe there are issues to be addressed.

These particularly relate to:

- the information consumers have available to them about financial advisers and other intermediaries, and consumers’ abilities to assess that information;

- the standards applicable to intermediaries, including in relation to minimum standards and conflicts of interest; and

- consumer redress, sanctions, and enforcement – including how disputes get resolved, what remedies do consumers have, and how obligations are enforced.

“If these issues are properly addressed, we see a better functioning industry with which consumers can engage with greater confidence. This, in turn, can encourage greater use of financial intermediaries where that is appropriate.

The paper discusses possible changes in three main areas:
- Enhanced consumer information
- Enhanced redress, enforcement and sanctions
- Enhanced standards.

The paper then canvasses various options for regulatory mechanisms to implement changes decided upon. The options canvassed are:
- General legal standards
- Registration
- Restriction of Occupational Designations
- Licensing.

In considering these options, Michael Webb said the challenge is that any reform be effective, proportionate and workable, with any unnecessary costs of regulation avoided.

Michael Webb said the task force had taken a functional approach in looking at the financial intermediary industry, asking what sorts of roles do those people who provide financial advice or marketing services undertake.

“We are very interested in hearing the views of consumers and the industry on the proposals in the paper. We will be holding consultation meetings in various locations during the consultation period and we hope to hear from many people. Feedback will significantly contribute to our assessment of the most appropriate responses to the matters in this paper.

Submissions close on 20 June.

NOTES

For an electronic version of the consultation paper, visit http://financialadvisers.med.govt.nz or email financialadvisers@med.govt.nz. Hard copies of the paper are available by calling freephone 0508 TASK FORCE (0508 827 536).

Further information (including details on the schedule of consultation meetings) available from: http://financialadvisers.med.govt.nz, by emailing financialadvisers@med.govt.nz or by calling the freephone number 0508 827 536.

Schedule of consultation meetings

Date & Time Location Venue
31 May 2005, 10am-12pm Auckland Copthorne Hotel Harbourcity, 196 - 200 Quay St, Auckland Central
31 May 2005, 3pm-5pm Hamilton SKYCITY Hamilton, 346 Victoria Street, Hamilton
1 June, 11am-1pm Tauranga Baycourt, Durham Street, Tauranga
7 June, 10am-12pm Wellington State Services Commission, 100 Molesworth St, Thorndon, Wellington (to be confirmed)
8 June, 10am-12pm Christchurch Christchurch Convention Centre, 95 Kilmore Street, Christchurch
8 June, 3.30pm-5.30pm Nelson Fairfield House, Trafalgar St South, Nelson
9 June, 1am-3pm Dunedin The Dunedin Centre, 1 Harrop Street, Dunedin

ENDS

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