The Government's Taskforce on the Regulation of Financial Intermediaries says changes are needed to boost consumers' confidence in financial product and service providers.
In a 50-page paper posted on the Ministry of Economic Development's website entitled Options for Change, the eight-member taskforce puts forward three reform proposals.
These are:
*
Enhanced consumer information.
* Enhanced redress and enforcement mechanisms plus effective sanctions.
* Enhanced ethical and conduct standards.
Chairman Michael Webb says the taskforce does not believe the industry is in crisis.
"However, there are issues that should be addressed and, if properly addressed, will significantly contribute to a better functioning industry and one in which consumers in particular can engage with greater confidence."
The taskforce said enhanced consumer information would be achieved by improving education, including legal rights, and boosting disclosure requirements by intermediaries and product generators.
The "base requirement" for the enhanced redress proposal would be forcing all financial intermediaries to join a dispute resolution body and setting "high level" principles. Regulatory options presented range from self regulation to state responsibility.
The taskforce's preference is for the consistent application of baseline standards across intermediaries. This could include a registration regime or a licensing regime.
"Mandatory standards, when coupled with effective enforcement, can enable expulsion from the industry of those who persistently breach their obligations," the taskforce says.
After feedback on its initial issues paper, the taskforce has decided journalists and authors will be excluded from the review.
However, real estate agents, accountants, lawyers and sharebrokers remain - for now, along with fund managers, bank employees, mortgage brokers, financial planners and insurers.
Financial advice is defined as the providing of information, analysis, advice or recommendation about financial products and investment or savings decisions.
The taskforce was launched by then Commerce Minister, Margaret Wilson, last August after the International Monetary Fund raised concerns about the state of financial regulation in New Zealand.
