News
Financial service provider rules now enacted
The Financial Advisers Act 2008 (FAA) was passed by Parliament at the end of September, establishing a new regulatory regime for financial advisers to encourage public confidence in the professionalism and integrity of the industry. The Securities Commission will be responsible for overseeing the new regulatory model, monitoring industry standards, authorising financial advisers and granting qualifying financial entity (QFE) status to organisations. The FAA will be introduced in stages, following the implementation of committees and regulations, and is expected to be fully operational by about the end of 2010.
At the same time Parliament also passed the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA), which is the umbrella legislation for reform in this area of the law. The FSPA requires all financial service providers to be registered and to be members of an approved industry-led dispute resolution scheme. Once the register and the dispute resolution scheme have been established and approved, and those affected have had an opportunity to comply with the legislation, consumers will be able to search the register via the internet and make complaints under the dispute resolution scheme This process is currently expected to take up to two years.
A full description of this regime is contained in our recently published article "Financial services law reform clears another hurdle" with further details on the FAA set out in the article –"Key aspects of the Financial Advisers Bill still under consideration". These articles describe the regime as proposed following the Select Committee reporting stage. As enacted, the most significant amendments not reflected in these earlier articles are:
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employees of QFEs are able to give financial advice in relation to a category 1 product (complex products), provided in each case the QFE is itself the issuer of the product;
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QFE employees are not required to be a member of an approved dispute resolution scheme under the FSPA; and
- registered valuers have been included in the list of persons not covered by the FAA.
If you are going to be affected by the changes to the law, you will need to give some thought as to how you, or your organisation, are going to set up processes to ensure compliance with this legislation. We would be pleased to assist in that regard.
If you have any queries please contact your usual Bell Gully adviser, or one of the following:
David Craig
Partner
Murray King
Partner
Haydn Wong
Partner
