20. Annex One: Questions
Q1. Are there any other objectives which should be included in legislation (which are not already covered by paragraphs 13 and 14?)
Q2. Are the basic categories of financial product (at paragraph 35) appropriate?
Q3. If not, why not? Are they too broad or too narrow?
Q4. Should there be any exemptions for advice about certain products?
Q5. If so, which products? And why?
Q6. Is "public knowledge" about a type of financial product a good enough reason to reduce obligations on intermediaries?
Q7. Do you think that "investment property" should be included as a "financial product"? If so, how would you define "investment property"?
Q8. What would be the cost and benefit of including advice on any "investment property" in this regime?
Q9. Should other forms of tangible property (for example gold bullion) be considered as a "financial product"?
Q10. Is the proposed description of "financial advice" workable? If not, why not and how should it be changed?
Q11. Is there advice which does not relate to the buying and selling of financial products? If so, how should it be described?
Q12. What would be the benefits and costs of treating such advice as "financial advice"?
Q13. Ministry officials note that a number of professions including journalists, lawyers, accountants, budgeting advisers and real estate agents can provide financial advice. In your view, should any profession be exempted from the proposed legislation?
Q14. If so, can you please describe the group, and then provide reasons why, including consideration of the costs and benefits of such an exemption.
Q15. In your view, is the proposed description of "financial intermediary" appropriate?
Q16. Do all intermediaries provide advice? Or do some intermediaries only carry out a transaction at a client's request?
Q17. Does the category of "information only" financial intermediary present a realistic division in the types of New Zealand intermediaries?
Q18. Is there any information only intermediary who is not an employee? If so, can you please provide an example of how such an intermediary operates, and how they contact / are in contact with members of the public?
Q19. Do you agree or disagree with the assumptions at paragraph 90 about information only intermediaries?
Q20. Does the category of "product marketer" financial intermediary represent a realistic division in the types of New Zealand intermediaries?
Q21. Is there a product marketer who is not an employee? If so, can you please provide an example of how such an intermediary operates, and how they contact / are in contact with members of the public?
Q22. Do you think that financial intermediaries who give advice about less complex products (such as (e.g.) car insurance, house and contents insurance) should be automatically subject to lower levels of regulation than intermediaries who give advice on and sell more complex products (such as (e.g.) life insurance)?
Q23. Do you agree or disagree with the assumptions at paragraph 98 about product marketer intermediaries?
Q24. Does the category of "high level" financial intermediary represent a realistic division in the types of New Zealand intermediaries?
Q25. Do you agree or disagree with the assumptions at paragraph 113 about high level intermediary intermediaries?
Q26. Do you think that there should be a separate category of financial intermediary to include "execution only" intermediaries (that is those intermediaries who provide transaction services without providing advice)?
Q27. Does the category of "execution only" financial intermediary represent a realistic division in the types of New Zealand intermediaries? If not where should these intermediaries fit?
Q28. Will businesses be high level intermediaries? If so, what processes do businesses use to advise a member of the public on the suitability or appropriateness of financial advice or financial product to the individual circumstances of that member of the public?
Q29. If so, are there any obligations which businesses will find it harder to comply with than individuals practising as high level financial intermediaries?
Q30. In addition to a general strict liability provision requiring intermediaries not to engage in conduct that is misleading or deceptive or likely to mislead or deceive, would it be useful to have additional specific prohibitions on financial intermediary conduct?
Q31. Do you agree with the possible statutory duties listed at paragraph 143 above?
Q32. Should any of the additional duties apply to all intermediaries, or just high level intermediaries? Why?
Q33. What would be the costs and benefit of imposing such duties?
Q34. And, what type of penalties should attach for breach of the duties listed at paragraph 143 above? For example, should there be criminal penalties?
Q35. What types of intermediaries, in addition to investment brokers, would receive money and property from members of the public?
Q36. Should these intermediaries be subject to money handling legislative requirements?
Q37. Which types of intermediaries hold trust accounts now? Are there some sectors of financial intermediaries which use a trust account more than another sector?
Q38. Are the requirements listed at paragraph 153 appropriate for those who hold client money?
Q39. What would be the cost and benefit of applying these obligations to intermediaries who receive money and property from members of the public?
Q40. Who would be responsible for monitoring these trust accounts?
Q41. Do you agree with the disclosure obligations for information only intermediaries listed at paragraph 166?
Q42. Do information only intermediaries receive commissions, bonuses, fees or remuneration which is in addition to salary or wages?
Q43. What information should a member of the public be required to be told about an information only intermediary?
Q44. What would be the cost of requiring information only intermediaries to disclose this information? Does the benefit to consumers of receiving this information outweigh the cost?
Q45. Should "execution only" intermediaries have to make disclosure listed in paragraph 174? Particularly, should fees on switching products be included in the general information on remuneration that a broker would be required to disclosure?
Q46. If not, why not, and which obligations would you remove or add?
Q47. If you agree that execution only intermediaries should have to make these disclosures, what are the costs and benefits of these disclosure obligations?
Q48. Should product marketer intermediaries have to make the disclosure listed in paragraph 176? What are the costs and benefits to this?
Q49. Should product marketers provide a statement to consumers which explains that consumers are not receiving advice from a high level intermediary? If so, what information should be in such a statement? What are the costs and benefits of providing this statement?
Q50. Should high level intermediaries have to make additional disclosure listed in paragraph 184?
Q51. If not, which why not, and which obligations would you remove?
Q52. If you agree that high level intermediaries should have to make these disclosures, what are the costs and benefits of these disclosure obligations?
Q53. Is there any sector which should have special disclosure obligations?
Q54. If so, which obligations, and to which sector? And what would be the costs and benefits of having different disclosure obligations?
Q55. Do you agree with the table setting down responsibilities in relation to discipline of intermediary for breaching statutory standards?
Q56. Is there a better model for disciplining intermediaries? If so, please provide details.
Q57. Are there any powers which the Securities Commission will require which are not listed above?
Q58. Are there any powers which the Minister will require which are not listed above?
Q59. Is there a better model of responsibilities than the table which details the responsibilities of the Securities Commission and the Minister? If so, please provide details.
Q60. Are there any minimum corporate governance requirements which should be placed on approved professional bodies?
Q61. Is there any function which an approved professional body should not be able to carry out because it would interfere with an approved professional body's responsibilities?
Q62. Do you agree with the information to be provided by high level intermediaries at paragraph 242?
Q63. Is there any additional information which approved professional bodies should be required to collect from high level intermediaries, and which consumers would expect?
Q64. Is there any information which should not be on a public register?
Q65. What will be the cost of providing this information to the approved professional body, and the cost of approved professional body providing this information to the public body?
Q66. Is labelling of competencies required?
Q67. If so, should it be up to an approved professional body to develop common descriptions of competencies? Or should this be part of the oversight the role of the Securities Commission or the government? What would be best taking into consideration costs and benefits of each option?
Q68. Do you agree with the proposed "competency setting" function of approved professional bodies? Why / why not?
Q69. Do you agree with the proposed "conduct setting" function of approved professional bodies? Why / why not?
Q70. Do you agree with the proposed "monitoring" function of approved professional bodies? Why / why not?
Q71. What do you consider the costs of the suggested monitoring approaches would be? Could these costs be mitigated through a phased implementation or through greater initial monitoring by the Securities Commission?
Q72. Do you agree with the proposed "reporting" function of approved professional bodies? Why / why not?
Q73. Is there any other way to ensure that the Securities Commission could be kept updated on approved professional body and financial intermediary behaviour?
Q74. Do you agree with the proposed "disciplinary" function of approved professional bodies? Why / why not?
Q75. Do you think approved professional bodies need to have a "dispute resolution" function? Why / why not?
Q76. What is your preferred option on how to deal with cross sector practice? What would be the costs and benefits of your preferred option?
Q77. Should there be any restriction on the type of entity which can seek to apply to be an approved professional body?
Q78. Do you agree with the reasons listed at paragraphs 298 and/or 299? If not, which ones? And why not?
Q79. What are the costs and benefits of allowing single employer entities to be approved professional bodies? Does the cost outweigh the benefit, or the benefit outweigh the cost?
Q80. Do you agree or disagree with the proposed process for initial approval of an applicant approved professional body? Why?
Q81. Are there other approval methods which may work better? Why?
Q82. Do you agree that there should be time limits on the initial approval process?
Q83. If so, what would be an appropriate time for the Securities Commission to consider rules of an applicant approved professional body in light of Securities Commission resources or detail of the applicant approved professional body rules?
Q84. And, what would be an appropriate time for the Minister to consider rules of an applicant approved professional body in light of the Minister's resources or detail of the applicant approved professional body rules?
Q85. Do you agree or disagree with the proposed process for changing rules of an approved professional body? Why?
Q86. Are there other methods which may work better? Why?
Q87. Do you agree that there should be time limits on the rule change process?
Q88. Should the Securities Commission be able to initiate the process to change the approved professional body rules? Could the Securities Commission approve rule changes if technical or minor?
Q89. Do you agree that the Securities Commission could issue directions to an approved professional body to require it to comply with the approved professional body rules?
Q90. Do you agree or disagree with the proposed process for deregistering an approved professional body? Why?
Q91. Are there other methods which may work better? Why?
Q92. Should public education be within the role of approved professional bodies? Why? What are the costs and benefits which apply to your response?
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?
Q95. What type of assistance would you require if setting up an approved professional body? Could you describe this assistance, and/or place a value on it?
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