Recommendations

1. Note that the Financial Intermediaries Task Force was appointed on 19 October 2004 (Cabinet Appointments and Honours Committee decision APH (04) 164).

2. Note that the Financial Intermediaries Task Force reported back on 29 July 2005.

3. Agree in principle with the Financial Intermediaries Task Force recommendation that there should be a co-regulatory framework for the regulation of financial intermediaries.

4. Agree in principle that the co-regulatory framework should have the following features:

• that there would be industry-led approved professional bodies and a government regulator which would work together to regulate financial intermediaries;
• the government regulator would be the Securities Commission;
• financial intermediaries would be subject to enhanced disclosure obligations when providing financial advice with obligations dependent upon the class of financial intermediary;
• legislation would set a number of conduct standards for financial intermediaries;
• financial intermediaries would be subject to dispute resolution and disciplinary procedures.

5. Note that this further design work on the co-regulatory framework would be done through consultation with potential approved professional bodies, the Securities Commission and consumer groups.

6. Note that as part of this design work, the Ministry would consider links with other reviews in the non bank financial sector including work on the Review of Financial Products and Providers, Domestic Institutional Arrangements and the Financial Action Task Force 40 Recommendations on Anti-Terrorism and Money Laundering.

7. Direct the Ministry of Economic Development to undertake detailed design work with stakeholders on the Financial Intermediaries Task Force recommendations and to report back with options, recommendations and final policy decisions regarding arrangements for financial intermediary regulation in mid/late 2006, with the intention of introducing legislation in 2007.

8. Direct the Ministry of Consumer Affairs to consider dispute resolution processes for financial intermediaries in conjunction with other dispute resolution processes in the financial sector.

9. Agree to the release of this paper on the Ministry of Economic Development website.