Application of the Co-Regulatory Framework
44. In addition to the matters addressed in this paper, there are other areas which the Ministry would consider as part of the design phase for the co-regulatory framework. I ask Cabinet to note that there would be further design work on the co-regulatory framework (including consideration of links with other reviews in the non bank financial sector) and that this would include:
- whether there should be set processes for handling client moneys which would attach to those financial intermediaries carrying out a brokering role;
- how dispute resolution and disciplinary functions would apply to those financial intermediaries who are product marketers, as the Task Force suggested that they were not required to belong to an APB;
- whether fidelity funds, professional indemnity or other insurance, or other investor compensation schemes should form part of the regulatory model, and risks of and options for implementing these;
- clearer policy proposals on the application of the regime, exact roles and responsibilities of financial intermediaries (including the types of financial intermediaries who would be subject to legislation, for example, lawyers, accountants, journalists etc, and the types of financial products about which financial intermediaries provide advice, such as term deposits); and
- whether certain financial transactions should be considered as part of the Review of Financial Products and Providers or the Review of Financial Intermediaries, including futures dealings. Currently master trusts and wrap arrangements are being considered as part of Review of Financial Products and Providers. The Ministry proposes to consider the links between this work and the work on financial intermediaries.
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