Explaining Key Improvements in Financial Services Legislation Amendment Bill
Discover the objectives, findings, and key improvements of the Financial Services Legislation Amendment Bill through an outline review of the current regulatory regime, the main elements of the new regime, transitioning steps, and decisions yet to be made. Explore how the bill aims to address challenges such as uneven regulatory standards, barriers to online advice, rise of fintech, and the need for quality advice in the financial services sector.
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Presentation Transcript
The Financial Services Legislation Amendment Bill explained
Outline The review of the Financial Advisers Act: What did we hear about how the current regulatory regime is working? What do we want to achieve? The Financial Services Legislation Amendment Bill: What are the main elements of the new regime? Next steps Transitioning to the new regime What is left to be decided? 2
Objectives and findings of the review KiwiSaver balances are growing can people engage with them? KiwiSaver FMA found that in 1000 KiwiSaver sales only 3 involved personalised financial advice Current law is a barrier to online advice Rise of fin-tech Emerging technology Robo-advice already provided ACCESS to advice overseas Current regime is complex QUALITY of advice Consumer interface Confusing terminology the term registered gives the impression that Registered Financial Advisers are actively monitored Uneven playing field Regulator focus on conduct FMA report on life insurance replacement business found links between high upfront commissions and product replacement Only some advisers are required to meet standards of competence and conduct 3
Key improvements in the Financial Services Legislation Amendment Bill Before After ALL providing advice subject to standards of conduct and competency (Some of these standards will sit within legislation and some within a new universal code of conduct) Uneven playing field (Different advisers are held to different standards based on the type of product and type of advice) Regulatory boundaries restrict provision of advice (personalised vs class advice, Category 1 vs Category 2 products) Just financial advice and no product categories (enables sensible advice conversations tailored to consumers needs) 4
Key improvements in the Financial Services Legislation Amendment Bill Before After Personalised advice can only be provided by a natural person Enabling provision of robo-advice (through technology neutral legislation) Oversight of all providing financial advice and ability to be licensed at the firm level (to increase efficiency and reduce compliance costs) Only some advisers, and large firms, are actively regulated by the FMA 5
Transitional arrangements Aug 18 (est) Code of Conduct approved 2014 Feb 17 Consultation on draft bill May 15 MBIE issues paper Dec 18 (est) Transitional licensing opens end 17- early 18 (est) Select Committee process MBIE kicks off review Mid 18 (est) Bill passed Jul 16 Aug 17 Draft bill introduced to Parliament Design of new regime announced 6 months May 19 (est) Full licensing opens Transitional Licences in place New regime takes effect May 21 (est) All full licences in place Safe Harbour Competency 2 Years 6
Next steps Legislative process Parliament considers Bill (estimated to mid 2018) Alongside the legislative process: Code Working Group develops Code of Conduct (estimated to mid- to-late 2018) MBIE develops Regulations including to set disclosure requirements and licensing fees (estimated to mid-to-late 2018) FMA develops the process for licensing financial advice providers and provides guidance (ongoing) 7
