4. Executive Summary
1. The Government is reviewing the regulation of financial intermediaries in New Zealand because the current voluntary or sector specific regulation of intermediaries is failing to ensure that intermediaries are accountable to consumers, that intermediaries have the experience and expertise to match consumers with products, and that consumers are able to make informed decisions about their intermediaries.
2. Cabinet has provided "in-principle" approval to the introduction of a co-regulatory framework under which "approved professional bodies" and the Securities Commission and the Minister will work together to regulate financial intermediaries. This co-regulatory framework will be set down in legislation.
3. This discussion document builds on the consultation carried out by the independent Taskforce on Financial Intermediaries and by Ministry of Economic Development officials and presents detailed options under the co-regulatory model for public comment.
4. In particular, the document seeks public comment on the content of the proposed legislation:
- The application of the legislation
- The definitions of "financial intermediary", "financial advice" and "financial product"
- The different classes of financial intermediaries and how these different classifications will work in practice
- Legislative conduct standards for financial intermediaries
- Disclosure obligations on financial intermediaries
- The co-regulatory model
- the powers of the Securities Commission
- the powers of the Minister
- the powers and rules of the "approved professional bodies"
- co-regulatory processes
5. Submissions to the discussion document will contribute to preparation of a Cabinet paper in late 2006. This subsequent Cabinet paper will seek approval for the content of the financial intermediary legislation, proposed to be introduced in 2007.
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