Executive Summary
2. The Task Force carried out an independent review into financial intermediary regulation in New Zealand and concluded that consumers, industry and financial markets would benefit from financial intermediary specific legislation. Rather than endorsing the status quo of the current voluntary self regulatory system, or direct government supervision, the Task Force recommended the introduction of a legislative framework for financial intermediaries, whereby a government regulator, Minister and industry-based approved professional bodies would create and approve standards for individuals and businesses who provide financial advice or who market financial products to members of the public.
3. This paper provides a response to the Task Force report and recommends that the Ministry carry out further design work on the co-regulatory model recommended for financial intermediaries by the Task Force, and, as a basis for this design work, that the Securities Commission undertake the role of government regulator.
4. There is still considerable design work to be done on the proposed co-regulatory legislative framework, including work on the definitions and obligations of financial intermediaries and the roles and responsibilities of the government regulator, Minister and the industry-based approved professional bodies. However, I am seeking Cabinet agreement in principle at this stage to the co-regulatory model and regulator to allow Ministry officials to work with industry and the Securities Commission to leverage off existing industry practice and expertise in designing the regime.
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