Financial Advisers Bill

I rise to speak to Part 4 of the Financial Advisers Bill, which deals largely with how financial advisers are to be regulated. Essentially, as the legislation is now to be enacted, it will be under the guide of the Securities Commission, which was established in Part 1 of the Securities Act. It was going to be product regulation based under the Securities Act and the Securities Markets Act on the one side, and then, as we have discussed in previous parts of the bill, financial adviser regulation with supervision of both qualified financial entities, as Mr Foss just spoke about, and of the accredited financial advisers, as Simon Power spoke about earlier. Clearly, under the Securities Commission there will be enforcement of the statutory obligations of each of those organisations.

But what is now being proposed in Part 4 is how we are going to regulate financial advisers through the establishment of a Commissioner for Financial Advisers. That is dealt with in subpart 1 of Part 4. The commissioner will be a member of the Securities Commission. If we look back to the legislation as originally proposed, if I recall correctly, we see that the idea was that we would set up a number of bodies under each industry organisation that would then be responsible for the accreditation of the financial advisers within their own industry.

💬 Hon Lianne Dalziel: They would apply to be—

Yes, that is correct. Then there would be a default provider if there was nowhere to go. It all got a bit complicated at the end of the day, and everyone in the House agreed that going to one body, with the default provider being the Securities Commission and therefore the Commissioner of Financial Advisers, was by far the best alternative in terms of stopping duplication. Everyone knew where to go, and we have come up with the best solution.

Essentially, the functions of the commissioner are dealt with in clause 77, and they are as follows: “(a) to appoint members of the code committee:”. As I understand it, the code committee will be responsible for establishing the code, writing it, and updating it as time goes by. The other functions of the commissioner are “(b) to review the code and propose changes to the code as required: (c) to act as a chairperson of the disciplinary committee:”—because a disciplinary committee will be established under the commissioner for dealing with complaints and disciplinary actions—“(d) to oversee and expedite the work of the Commission in relation to financial advisers:”. Lastly, it is the function of the commissioner to exercise and perform such other functions, powers, and duties as are required of the commissioner.

Clause 82 deals with the content of the code that the commissioner will be required to put in place. What we have done in the legislation is outline some of the key criteria that must be part of the code. It must provide for minimum standards of professional conduct. As one would expect, this includes things like the standard of competence that must be required from financial advisers or from qualifying financial entities, the level of knowledge and skills that these individuals or qualifying organisations must have, and the level of ethical behaviour and client care that one would expect from a quality financial adviser.

The code must also provide for continuing professional training for authorised financial advisers, which is something we have seen come across a number of professions, whether for plumbers, electricians, or financial advisers. We have seen that ongoing requirement for continuing professional development, and more recently we have seen this come into the Real Estate Agents Act, where both licensees and real estate salespeople who remain independent contractors will be required to undertake ongoing continuing professional development. Lastly, in terms of establishing the code under clause 82, subclause (3) states: “The code must specify different standards for different classes of authorised financial adviser.” That deals largely with the fact that there will be a two-tiered system where financial advisers will need to attain a higher level of qualification to advise on category 1 products versus category 2 products. I think that is good.

Subpart 2 of Part 4 deals with complaints about financial advisers and how that will be dealt with. It is pretty straightforward. Any person now may complain to this one body, and it will be far clearer than it was under the original legislation that was proposed. Thank you.

The question was put that the amendments set out on Supplementary Order Paper 253 in the name of the Hon Lianne Dalziel to Part 4 be agreed to.

Amendments agreed to.

Part 4 as amended agreed to.

Part 5 General provisions