The FMA’s guidance note, which takes effect in March next year, has received a mixed reaction from the industry, with the Institute of Financial Advisers supporting it and the Bankers’ Association slamming it.

But the final guidance note may not be the end of the legal debate, according to an expert on financial services law.

Chapman Tripp partner Mike Woodbury said it was possible advisers or companies could mount a legal challenge against aspects of the FMA’s interpretation of the Financial Advisers Act regarding KiwiSaver advice. 

“It’s probably not the sort of thing that would lend itself to a declaratory judgment,” he said.  “However, court guidance could be good to get the requisite certainty in one or two areas that arise.”

He said it’s “not inconceivable” that a judge or judges could take a different view to the FMA on certain parts of the guidance, although “I don’t know whether courts have gone as far as overturning a regulator’s view”.

Woodbury said a court case involving KiwiSaver advice would add useful case law and there were a number of examples in commercial law where courts had helped clarify contentious issues.

“It’s no different to other aspects of the law; over time people have evolved a consensus or the courts have issued meaningful guidance,” he said. 

“This has included the meaning of the word ‘material’ in securities law and the term ‘good faith’ in employment law.  Another one was the recent judgment around directors’ duties.”

Woodbury said the concept of “implied advice”, which was questioned by a number of submitters, was one part of the FMA guidance that could potentially be tested in court.