The government bill and subsequent supplementary order paper do not currently address the problems in the Financial Advisers Act and Financial Service Providers (Registration and Dispute Resolution) Act that will prevent corporate entities from providing financial advice, according to Chapman Tripp partner Tim Williams. Apart from a few limited exceptions, the Act currently says that financial advice has to be provided by individuals in New Zealand. This has already raised concerns with large international financial advisers who advise institutional superannuation funds here, who are not about to shed their corporate structure.

"The second major problem with the legislation is its very wide scope. On its face, it appears to be aimed at financial advisers and financial planners but it has gone far broader than that, and applies to anyone giving financial advice, including advice as part of a business on buying a property," Williams told Good Returns. "While valuers and real estate agents are exempt, builders, electricians, architects and engineers who advise in their technical field on a house or a building which is for sale are not. Surely it isn't intended they sit financial adviser exams."

"Hopefully these and other deficiencies will be fixed," he said.

Williams said he is confident Parliament's Commerce Committee will appropriately consider Chapman Tripp's concerns, and said he understands there has been some acknowledgement that the select committee will look at advice from wholesale advisers, which could extend to a reconsideration more generally of what advice corporates can give.

The law firm has made written submissions on the government's bill to amend the legislation, and is calling for changes to broaden the limited exception allowing organisations and their employees to make investment management decisions and give financial advice, grant exemptions for overseas advisers, provide more suitable tailored rules for wholesale advisers and managers and make provisions for one Qualifying Financial Entity to cover a group of related companies in respect to products issued by the group.

Williams said he raised concerns with the act when he spoke at the IFA Conference in July last year and even before then. When he initially questioned whether the prohibition on corporates providing financial advice was an unforeseen consequence, he was told by officials that it was intended.