The Securities Commission is to contact investment advisers and brokers early next month to check their compliance with new investment adviser disclosure laws.
Advisers and brokers were expected to comply with the law as soon as it took effect on February 29, commission director primary markets Kathryn Rogers
said.
Under the law, a disclosure statement must be given to a client before any advice was given or any investment money received.
It must give specific information about the adviser, the products they gave advice on, and how they were paid.
The law was passed in October 2006, so investment advisers and brokers were given plenty of time to prepare new disclosure statements, Ms Rogers said.
Advisers' and brokers' advertisements for their services must also comply with the new law.
"We first want to know whether each adviser and broker has a disclosure statement as required by the new laws," she said.
"We will then review a sample of the disclosure statements and advertisements for compliance with the new laws. The commission will take enforcement action in appropriate cases."
It could make orders to prohibit or correct a disclosure statement, or to disclose information, or to temporarily ban an adviser or broker.
The commission said it was a criminal offence to not disclose information that the adviser or broker knew should be disclosed, or to have a misleading, deceptive or confusing disclosure statement or advertisement.
Offences carried fines ranging from $30,000 to $300,000.
An adviser or broker could be banned for up to 10 years if convicted of one of the criminal offences, if they consistently contravened the law, or had been banned overseas.
The commission had set up a website explaining the effects of the law changes.
Recently it mailed out more than 5000 copies of a guide to the new law.
- NZPA
