17. Risks under the Co-Regulatory Model
Default Position Required …
317. There is a risk that there will be no approved professional body for a particular part of the industry, or that an existing approved professional body fails to carry out the functions listed above or is de-registered.
318. There are also industry capture risks - that industry regulatory bodies (especially in those sectors where there is already a strong industry representative) act as "closed shops" deterring innovation and competition, preventing entry into the industry by creating excessive barriers or not taking into account the interests of all relevant stakeholders (for example consumers) when carrying out their regulatory functions.
319. The co-regulatory model requires a default option to meet these risks. The Ministry is considering a range of options including:
- A regime run by the Securities Commission under which financial intermediaries would not have to join an approved professional body, but could register directly with the Securities Commission, agree to abide by model codes of conduct, competency (to be set in consultation with industry experts) discipline and dispute and reporting.
- Government officials working and negotiating with existing approved professional bodies to broaden the industry coverage to allow financial intermediaries to be covered by another approved professional body. This could involve government assistance. Again, industry feedback would be required.
Questions
Q93. Do you agree or disagree with the proposed default options at paragraph 319? Why?
Q94. Are there other methods which may work better? Why?
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