Controversial and coming soon, but how broad is COFI’s reach?
And there is a risk that the Financial Markets (Conduct of Institutions) Amendment Bill may create an uneven regulatory playing field, it says. “Some institutions will be subject to a wide-ranging conduct and licensing regime while others providing the same service will not.”
Bell Gully says there is considerable overlap of COFI’s fair conduct principles and duties with existing conduct requirements in the Credit Contracts and Consumer Finance Act, FSLAA (the Financial Services Legislation Amendment Act) and the Financial Markets Conduct Act (FMCA).
For example, the CCCFA requires lenders to exercise care, diligence and skill and to treat borrowers reasonably and fairly. FSLAA has a series of similarly worded conduct obligations for those giving regulated financial advice. And the FMCA requires the care, diligence and skill of a prudent person.
Bell Gully says COFI’s statutory duties are broad enough to cover the obligations in each of the other three pieces of legislation and this could lead to uncertainty about scope. It also notes that COFI does not address the prospect of conflict between these obligations.
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