4 July 2006

Financial Intermediaries Discussion Paper Released

Commerce Minister Lianne Dalziel today released a discussion paper on the co-regulatory model proposed for financial intermediaries.

"This is the next step in the review of financial intermediaries, which, together with the Review of Financial Products and Providers, will result in a quality regulatory framework for the financial sector," Lianne Dalziel said.

In December 2005, Cabinet agreed in principle to the adoption of a co-regulatory model on the basis that:

· industry has the experience to suggest to government the skills and practices a good adviser should have, and what a consumer should expect;

· government oversight reduces the risk of inconsistencies across industry practice in the co-regulatory model, so that no one sector is disadvantaged; and

· consumers rely on intermediaries to provide them with the information they need to make good financial decisions.

Feedback is being sought on:

· who is a "financial intermediary", what are the different levels of "financial intermediary", what is "financial advice" and what is a "financial product"?;

· the conduct and disclosure standards for financial intermediaries; and

· the co-regulatory model, including the powers of the Securities Commission, the powers of the Minister, the powers and rules of the "approved professional bodies"

"I appreciate the contribution industry has made to the development of the discussion paper and their concerns around costs have been clearly noted. By applying quality regulation principles, the resulting regulatory framework will meets its objectives without imposing unnecessary costs," said Lianne Dalziel.

Copies of the discussion paper can be downloaded from www.med.govt.nz or email financialadvisers@med.govt.nz for a hardcopy. Submissions close on 1 September 2006 and final policy decisions will be presented to Cabinet in late 2006.

ENDS

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