Concerns were raised earlier this year about section 71 of the Financial Markets Conduct Bill, which allowed authorised financial advisers (AFAs) and qualifying financial entity (QFE) advisers to approach only existing or former clients with offers of financial products. 

The section came under fire from financial advisers, who feared it would severely curtail their ability to prospect for new clients.

However, the Select Committee has recommended changing the section to allow offers made “through an authorised financial adviser or a QFE adviser who is acting in the ordinary course of business as a financial adviser.”

Chapman Tripp partner Tim Williams said he was pleased to see the concerns raised earlier in the year about section 71 of the Bill had been addressed for AFAs and QFE advisers.

“The Select Committee have responded sensibly to the submissions on this point. However telemarketing, stall offerings and any other unsolicited ‘meeting’ offerings by other persons of retail financial products (debt, equity, KiwiSaver and other managed investment products, derivatives and any other financial products identified in Regulations) will still be prohibited.

“The change will provide a further incentive for financial advisers who sell these types of products proactively to become either AFAs or QFE advisers.” he said.

“Financial advisers who proactively sell only insurance policies, and who are not AFAs or QFE advisers, will hope that their policies are not included by Regulations within the ambit of this provision.”

He said “Replacing the ‘existing or former clients’ restriction on AFA and QFE advisers with an ‘ordinary course of business’ limit had effectively resolved potential problems created by the previous version of the Bill for AFAs and QFE advisers”.

“Most of their unsolicited marketing should be in the AFAs’ or QFE adviser’s ordinary course of business”.