Disclosure requirements and commencement date set for new financial advice regime
Published: 25 June 2020
The Government has set new disclosure requirements to ensure that consumers seeking financial advice can make more informed decisions. It has also set the start date for the new financial advice regime as 15 March 2021.
New disclosure requirements
The new disclosure requirements will require businesses and individuals who give financial advice to disclose important information about their services to their clients.
"The disclosure requirements are set in regulations under the Financial Services Legislation Amendment Act, which introduces a new regulatory regime for financial advice, says Sharon Corbett, Manager Financial Markets at the Ministry of Business, Innovation and Employment.
"They are intended to improve transparency and help consumers with important decisions such as choosing where to get financial advice.
"Information those giving financial advice will need to disclose includes details about fees, the range of products they advise on, whether they have any conflicts of interest or earn commissions, and how to access dispute resolution services.
"This information needs to be provided at different stages of the advice process, including on the company's website, when an adviser meets with a client, and during any complaints process. This will ensure that consumers receive only the information they need, when they need it."
Ms Corbett says the regulations incorporate feedback on an exposure draft released in October 2019. In response to that feedback, changes have been made to make the regulations more workable for the range of circumstances in which financial advice is given. For example, the previously proposed requirement to keep a record of each disclosure has been removed, and disclosure of matters like conflicts, commissions, limitations and regulatory actions has been limited to things that would likely materially influence a client's decision.
"The disclosure regulations are a key part of the new regime and it’s important that advisers have time to understand the new requirements and to prepare to implement them before 15 March 2021."
New start date for financial advice regime
The start date for the financial advice regime has been set for 15 March 2021, meaning the new disclosure requirements and the regime will apply from that date. This follows the earlier announcement of its delay from 29 June 2020 to allow the sector to focus on helping clients through the impacts of COVID-19.
More information is available on the regulation of financial advice webpage.
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