This report is in four parts. In Part One the purpose and scope of the baseline review is presented. Government policy parameters around the financial adviser industry and the reasons for government intervening are also discussed. Government regulation can reduce financial market transaction costs and increase the efficiency of savings and investments.
In Part Two the new regulatory regime for financial advisers (categories, exemptions and requirements) and the other key pieces of legislation are outlined. The legislation regulates the provision of financial adviser services, including broking services, to clients in New Zealand.
One of the core principles of the FAA is that financial advice should only be offered by competent, ethical and accountable individuals. To achieve this there are three branches to the FAA:
1) disclosure: to ensure that consumers can make informed decisions about whether to use a financial adviser or broker
2) competency: to ensure that there are certain financial advisers who have the experience, expertise and integrity to effectively match a retail client to a financial product that best meets that person’s need and risk profile
3) accountability: to ensure that financial advisers are held accountable for any financial advice that they give and that there are incentives for financial advisers to appropriately manage conflicts of interest