The new Financial Services Legislation Amendment Bill was released less than two weeks ago but has already created concerns for some industry participants.

Commentators have said the “financial advice representative” designation could be confusing and the duty to put client interests first is too broad.

Chapman Tripp has produced a list of things it suggests submitters on the bill might want to consider. 

Among the potential problems highlighted, the firm said the client-first requirement was potentially expansive.

"The duty will apply when giving advice and 'doing anything in relation to the giving of advice'. This could extend the duty beyond the moment of giving advice. For example, as contemplated in MBIE's consultation paper, in determining whether to give 'information only' or 'financial advice', the adviser will need to put the client's interests first," it said.

"This may mean that, in some cases, advisers could be compelled to give financial advice. This is not an obligation found in the equivalent Australian duty to 'prioritise the interests of the client'.”

It said there was the potential for concern, too, about the bill introducing a client-first duty for wholesale providers.

Previously, advisers dealing with wholesale clients have not been captured by the bulk of financial adviser legislation.

Chapman Tripp said overlaying the statutory duty of client first on top of a wholesale client's contractual protection could be a concern for some providers.

It said some industry participants might also think requiring full disclosure for wholesale clients was unnecessary.

Better delineation between wholesale and retail services might also be required, it said.

"The bill states that if a financial advice or broking service is provided to any retail client, the entire service is deemed to be a retail service. such as meeting standards of competence, agreeing on the nature and scope of advice, and complying with the Code of Conduct. Better demarcation could be achieved by providing that retail service obligations should not apply to services provided to wholesale clients.”

What made incentives "inappropriate" should also be clarified further, it said.  "Will it extend to soft commissions? Or reward schemes based on sales targets? Remuneration design will likely come under real scrutiny. Submitters could ask whether financial advice providers should have a defence for putting in place appropriate incentive policies, procedures and controls."

Submissions are open until the end of this month.