“What we’ve done now is looked at those themes emerging from the various responses we received and set out a range of options to address them,” Webb says.

“We do not believe this is an industry in crisis but we do believe there are issues to be addressed.

These particularly relate to:

• the information consumers have available to them about financial advisers and other intermediaries, and consumers’ abilities to assess that information;
• the standards applicable to intermediaries, including in relation to minimum standards and conflicts of interest; and
• consumer redress, sanctions, and enforcement – including how disputes get resolved, what remedies do consumers have, and how obligations are enforced.

“If these issues are properly addressed, we see a better functioning industry with which consumers can engage with greater confidence. This, in turn, can encourage greater use of financial intermediaries where that is appropriate.

The paper discusses possible changes in three main areas:

• Enhanced consumer information
• Enhanced redress, enforcement and sanctions
Enhanced standards.

The paper then canvasses various options for regulatory mechanisms to implement changes decided upon. The options canvassed are:

• General legal standards
• Registration
• Restriction of Occupational Designations
• Licensing.

In considering these options, Webb said the challenge is that any reform be effective, proportionate and workable, with any unnecessary costs of regulation avoided.

Webb said the task force had taken a functional approach in looking at the financial intermediary industry, asking what sorts of roles do those people who provide financial advice or marketing services undertake.

“We are very interested in hearing the views of consumers and the industry on the proposals in the paper. We will be holding consultation meetings in various locations during the consultation period and we hope to hear from many people. Feedback will significantly contribute to our assessment of the most appropriate responses to the matters in this paper.

Submissions close on 20 June.

To read an excerpt from the paper, the summary section, CLICK HERE

The full paper is available at http://financialadvisers.med.govt.nz. Hard copies available by calling 0508 TASK FORCE.

This is a media release from the Financial Intermediaries Task Force