Sharechat Logo

Faafoi wants easier-to-understand adviser disclosure; FMA finds investors happier with offer docs

Tuesday 10th April 2018

Text too small?

Commerce and Consumer Affairs Minister Kris Faafoi wants more easily-understood financial adviser disclosure rules to make sure customers aren't led astray, and is seeking submissions on regulations accompanying the upcoming law change. 


The Ministry of Business, Innovation and Employment discussion document came out the same day that Financial Markets Authority-commissioned research showed investors have found product disclosure statements more useful than the previous regime in offering valuable insights in investment offers. 


Legislators are currently considering a bill to remove some of the confusion for consumers in the way financial advisers are designated, and putting client obligations on the industry. While that works its way through Parliament, MBIE is seeking feedback on proposed regulations that will set the disclosure requirements for advisers to make sure consumers all the information they need at the right time. 


"Consumers should have that information to assist them to decide, for example, whether to obtain advice from a particular provider," Faafoi said in a statement. "I want to make sure that important information is presented in simple terms that consumers understand." 


The proposed disclosure regime can draw on the experience of changes to securities law, which pared back the size of investment prospectuses to the more manageable product disclosure statement under the five-year-old Financial Markets Conduct Act. 


FMA-commissioned research found the product disclosure statement was the first thing investors looked at to get a sense of a product, using it as a primary information source for decision making. Interviewees told researchers PDS was an improvement on the investment statement-prospectus disclosure regime, but were "long and repetitive", using "academic" language and "a lot of legal terminology". 


"The significant work issuers have put into PDS documents is paying off, with investors paying attention to the information," FMA director of capital markets Garth Stanish said in a statement. "The PDS is a significant improvement to the previous disclosure regime and this research provides valuable insights from investors into how the PDS can be improved further."


Faafoi also said MBIE was taking submissions on proposed regulations to the financial services providers register which is part of the legislative programme. 


"Some mainly offshore-controlled entities have been 'free-riding' off New Zealand’s reputation for sound financial markets regulation by using their registration to imply that they are actively regulated in New Zealand when that is not the case," Faafoi said. "I want feedback on the proposals that aim to address this unscrupulous behaviour." 


The register regulations would set thresholds and exemptions requiring registration, set limits on promotion of registration, and impose information requirements. 


Submissions on the adviser regulations are open to May 25 and the register regulations to May 15



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MYOB adds 57% more subscribers in 2018 but total online customers still lag Xero's
Investors fear chilling effect as former IRD boss opposes capital gains proposals
Stuff 1H earnings slide but Nine still optimistic of finding buyer
NZ Post achieves first-half revenue growth for the first time since 2015
TeamTalk affirms annual earnings guidance as rising costs dent first-half profit
Government to step up efforts as second Queensland fruit fly detected
Spark's Moutter bangs drum for 5G spectrum auction
F&P Healthcare and ResMed drop patent infringement disputes
NZ dollar dips after Fed minutes not as dovish as expected
February 21st Morning Report

IRG See IRG research reports