New Zealand Government
Tuesday 19 June 2007 – Commerce Minister announces financial sector changes
Commerce Minister Lianne Dalziel today announced the first phase in a package of new rules for the non-bank financial sector.
Lianne Dalziel said that new rules arising from the reviews of Financial Products and Providers and Financial Intermediaries are relatively light-handed
and reflect feedback from industry.
The main changes include:
– regulation of financial advisers by a co-regulatory model involving Approved Professional Bodies (APBs) with oversight by the Securities Commission;
– registration of all financial service providers on a publicly-searchable database;
– implementing comprehensive consumer dispute resolution and redress mechanisms;
– licensing trustees and retaining them as frontline supervisors while enhancing the approval and monitoring role of the Securities Commission;
– making the Reserve Bank of New Zealand the single prudential regulator for banks, non-bank deposit takers and insurers;
“The decisions aim to promote a sound and efficient financial sector in which the public has confidence in the professionalism and integrity of advisers; and targeted regulation that does not impose unnecessary costs and that will encourage innovative and competitive markets,” said Lianne Dalziel.
Both reviews received input from a taskforce and expert advisory groups made up of people from key industry organisations, industry participants, professional organisations and government bodies.
Financial products and providers are currently regulated by a myriad of laws, which has led to gaps in coverage, inconsistencies in the regulatory treatment of similar products and unnecessary compliance costs.
“The decisions will also ensure that New Zealand meets its international obligations, especially those arising from the Financial Advisory Task Force necessary to mitigate against money laundering and the financing of terrorism.”
The term “financial intermediaries” has been changed to “financial advisers” to better reflect the work that they do.
Bills to make the phase one changes will be introduced later this year and passed in 2008, Lianne Dalziel said.
Phase two decisions on insurance, collective investment schemes and debt issuers, regulation of platform and portfolio management services and an enhanced disclosure regime will be made later this year, Lianne Dalziel said.
“Over the last seven years the Labour-led government has built a regulatory environment for our financial markets that people can have confidence in.”
The reviews of Financial Products and Providers and Financial Intermediaries were commenced in 2004 and 2005 to improve the regulation of non-bank financial institutions, financial products and financial advisers and are the final component of the government’s reform programme for the non-bank financial sector. They follow the introduction of the Takeovers Code, Securities Markets Legislation and changes to the Securities Act including rules around insider trading and market manipulation.
Non-bank financial products and providers include insurance, collective investment schemes, platforms and portfolio management services, non-bank deposit takers, securities offerings and issuers of equity and debt securities.
Cabinet papers on: Registration of Financial Service Providers; Trustee Supervisory Model; Institutional Arrangements for Prudential Regulation; Regulation of Non-Bank Deposit Takers; Financial Advisers – A New regulatory Framework; and Consumer Dispute Resolution and Redress, are publicly available on the Ministry of Economic Development’s website.