Financial adviser process well underway

Financial adviser process well underway

Financial advisers now have until 30 June 2011 to comply with the various steps required to become authorised to do business but must still be registered (and apply for authorisation) by 1 December.

That announcement was made on Wednesday by Commerce Minister, Simon Power, in response to concerns raised by the financial sector that they needed sufficient time to become compliant with new laws.

The Ministry of Economic Development advises that the process is well underway to get financial advisers up and running by the end of June next year.

All financial service providers, including financial advisers, must be registered by 1 December 2010. Registration is expected to open from 1 July on the new Companies Office website for the Financial Service Providers Register. The costs to register and details of those fees can already be found on the website www.fspr.govt.nz.

Another registration requirement is that all financial advisers must join an approved consumer dispute resolution scheme, or be covered by their employer’s scheme. The schemes will provide an independent service for both consumers and the finance industry where complaints or disagreements can be resolved.

To date one scheme has been approved, Financial Services Complaints Limited (FSCL). It is expected that other schemes will be approved shortly. The government reserve scheme will be formalised by the time the Financial Service Providers Register opens.

Those financial advisers seeking authorisation status – that is, advisers providing complex and difficult financial options - must apply for this from the Securities Commission by 1 December. They can do this when they register but approval will be dependent on them meeting a minimum standard of competence, knowledge and skill as specified in the Code of Professional Conduct.

The organisation implementing this standard of competence, ETITO, has set up a self-evaluation tool for financial advisers to check what they need to do to meet those standards. The tool assists advisers to determine their level of knowledge and identify any gaps they may need to address.

It is these advisers that now have until 30 June 2011 to complete any required training to become authorised.

ETITO will provide the Securities Commission with confirmation that the financial adviser has done what is required to be authorised and once authorisation is granted the Register will be updated to reflect this.

Meanwhile the Ministry of Economic Development encourages financial advisers to become as familiar with the process as possible – free information seminars are currently being run through the Companies Office - and get ready for registration from 1 July.

Questions and Answers

1. What will Financial Advisers have to do by December 2010 to comply with the regime?

All financial service providers, including financial advisers, will have to be registered and be a member of an approved dispute resolution scheme. Financial advisers will also have to have submitted their applications for authorisation (or in the case of a QFE, have submitted their applications for QFE status) and started undertaking any training necessary.

2. How do I find out more about the Registration process?

Registration information is available in the FAQs at www.fspr.govt.nz

3. How do I find out more about the dispute resolution schemes?

In order to apply to be registered, all financial service providers providing services to the public must be a member of an approved consumer dispute resolution scheme, or the reserve scheme being established by the Government. Financial service providers who join a dispute resolution scheme must pay the appropriate fees of the particular dispute resolution scheme, as well as the dispute resolution administration contribution collected at the same time as the FSPR registration fee.

More information is available in the FAQs at www.fspr.govt.nz and on the Ministry of Consumer Affairs website at www.consumeraffairs.govt.nz under ‘Disputes Resolution’.

4. How do consumers resolve disputes with a financial service provider?

If consumers have complaints, in the first instance they need to try and resolve these with their financial service provider. Where the consumer and provider are in dispute then they may take the complaint to the dispute resolution scheme their provider belongs to.

This service is free to consumers and allows the dispute to be considered by an independent party.

5. What will Financial Advisers have to do by 30 June 2011?

Financial Advisers wanting to provide financial advice on securities or wanting to provide financial planning services will have to have completed all necessary training and be authorised by 30 June 2011. Similarly organisations seeking QFE status will have to be approved by 30 June 2011. Any entity or individual wanting to provide advice after this time will need to do so in full compliance with the law.

6. When will the Financial Service Providers (Pre-Implementation Adjustments) Bill and the Code of Professional Conduct for Authorised Financial Advisers be finalised?

It is expected that both the Code and the Bill will be finalised by July this year.

7. How will the extended timeline impact on other financial service providers?

Financial service providers who do not provide financial advice will still need to be registered and be a member of an approved dispute resolution scheme by 1 December 2010. If a financial service provider is not registered or has not become a member of a dispute resolution scheme by this time, they are in breach of the law and subject to fines and/or imprisonment.

8. Where can I get more information about the authorisation of financial advisers?

Please visit the Securities Commission website at www.seccom.govt.nz/afa

9. How do I find out more about the minimum standards of competence, knowledge and skill specified in the draft Code of Professional Conduct for Authorised Financial Advisers?

Please read the draft Code at www.financialadvisercode.govt.nz

Visit ETITO’s website at www.afacompetence.org.nz Here you will find detailed information about the minimum competence standards proposed for authorisation, and information about where and how to access training and assessment. From this website, you can also access ETITO’s self-evaluation tool, register to receive your ETITO identification number which will be required for authorisation, and make examination and assessment bookings with ETITO.

ENDS

© Scoop Media