Submissions have now closed on the Financial Services Legislation Amendment Bill, which is set to repeal the Financial Advisers Act, and replace it with provisions in the Financial Markets Conduct Act.

In one of the submissions made to MBIE, Graham Duston, of FANZ, said the proposed new framework of financial advisers, financial advice representatives and licensed financial advice providers would create more flexibility.

“The financial adviser-based model will enable any licensed financial advice provider to engage financial advisers on a non-exclusive basis. Those financial advisers would sit under the financial advice provider entity and would not need to obtain their own licenses, thereby generating compliance efficiencies by enabling those financial advisers to simply operate under a licensee’s umbrella, freeing them up to focus on providing the actual financial advice,” he said.

“This would be a great outcome, as an increasing concern of financial advisers is the extent to which the regulatory compliance burden gets in the way of them having capacity to provide the level of service they would like. Being able to align with a number of financial advice licensees would reduce the extent to which financial advisers need their own operations licensed, which is likely to lead to an increase in the availability of financial advice for consumers.”

An MBIE spokesperson said that was a potential outcome of the new law.

“The bill, as it is currently drafted, would not prohibit a financial adviser being engaged by more than one financial advice provider. MBIE is exploring when and why this might happen in practice (it may not be something financial advice providers would permit). We need to make sure that this won’t give rise to any problems or risks that could run counter to the objectives of the new regime.”

Barry Read, of IDS, said how it would work would depend on the details about the new regime that were still to be revealed – such as what the requirements for licensing were, and how advisers would be listed on the FSPR.

But he said it could make sense for some advisers to work with more than one entity – such as those who offer mortgages with one firm but want to be able to do KiwiSaver with another. “If they agreed to abide by the rules and processes of the KiwiSaver license-holder, that could be possible.”

He said when the current regime came in, it had been hoped that some mortgage brokers could offer KiwiSaver advice under the umbrella of a QFE but it did not work because the QFE would have been responsible for all their services.