Changes to financial adviser regime proposed

Cabinet has decided to make changes to the financial adviser regime which Commerce Minister Simon Power says will make a big difference for industry members working to comply with it.

Mr Power said the commerce select committee, which is dealing with the Financial Service Providers (Pre-Implementation Adjustments) Bill, had been asked to consider the changes.

The committee is able to amend the bill before reporting it back to Parliament.

"These amendments will target the regime in the areas of the financial adviser industry that are most in need of increased oversight, will allow firms to provide advice efficiently, and will future-proof the regime," Mr Power said.

The proposed changes would:

* Greatly reduce the obligations on advisers to wholesale clients such as institutional investors, large companies, and highly sophisticated individuals;

* Allow institutions that operate as groups of related companies to use the 'qualifying financial entity' model efficiently;

* Allow companies to issue generic advice such as brochures in their own name;

* Increase the powers of the securities commission to grant limited exemptions from the regime; and

* Increase the Government's ability to give total exemptions from the regime through regulations.

Mr Power said it was necessary to ensure that people who did not need the comprehensive protection of the regime were not unduly burdened, while minimising the risk that the definition created a loophole for unscrupulous advisers.

- NZPA