Financial Advisers Act 2008
New definitions
The Bill provides several new definitions which include "bonus bonds", "call building society share", "call debt security", "term life insurance policy", "promoter", "insurance product", and "nominated representative".
The Bill defines the term "category 2 product", which is a low-risk type of investment product for which the requirements of the principal Act are less stringent. and includes: bank term deposits, bonus bonds, call building society shares, a call debt security, a consumer credit contract as defined in Section 11 of the Credit Contracts and Consumer Finance Act 2003 and an insurance product, including a term life insurance policy.
The Bill also provides a definition of "nominated representative" which is an individual who is formally nominated by a QFE in accordance with New Section 68A to perform financial adviser services in respect of that QFE (Part 1, Clause 6, amending Section 5 of the Act by inserting these definitions).
Certain activities not financial adviser services
The Act provides that activities performed by certain classes of person do not amount to financial adviser services.
The Bill makes clarificatory amendments and provides for a new exemption for advice that forms part of, or is connected with, ratings given by rating agencies that have been approved under the Reserve Bank of New Zealand Act 1989 or under insurance legislation (Part 1, Clause 8, amending Section 12 of the Act).
Employers and principals of financial advisers to be registered
The Act requires employers and principals of financial advisers to be registered.
The Bill provides that QFEs must to be registered and maintain their QFE status while a nomination of a nominated representative is in effect (Part 1, Clause 10, substituting Section 18 of the Act).
Disciplinary processes
The Bill provides that complaints need to be referred to the disciplinary committee only if the Securities Commission has first investigated the complaint (Part 1, Clause 21, substituting Section 98 of the Act).
Defences
In relation to the offence of performing a financial adviser service without being registered, the Act allows defendants charged with the offence to prove that the financial adviser service was performed by the defendant's employee or agent and that the employee or agent was registered. The Bill redrafts this defence so that it is merely that the act in question was performed by a registered financial adviser, regardless of that adviser's status as employee or agent (Part 1, Clause 22, amending Section 114 of the Act).
In relation to the offence of performing a financial adviser service without being authorised, the Bill in like manner simplifies the defence to being if the person charged proves on a balance of probabilities that the financial adviser service to which the charge relates was performed by an individual who is an authorised financial adviser regardless of that adviser's status as employee or agent (Part 1, Clause 23, amending Section 115 of the Act).
