A financial adviser is an individual who performs a financial adviser service.

Under this Act there are 3 types of financial adviser:

• (a) a financial adviser who is authorised and registered (an authorised financial adviser: see section 51); and

• (b) a financial adviser who is registered but who is not authorised; and

• (c) a financial adviser who is neither authorised nor registered but who is an employee or agent of a qualifying financial entity (a QFE: see section 63).

A person (A) performs a financial adviser service if, in the course of business, A—

• (a) gives financial advice; or

• (b) makes an investment transaction; or

• (c) provides a financial planning service.

A person (A) gives financial advice (and so performs a financial adviser service) if A makes a recommendation or gives an opinion or guidance in relation to acquiring or disposing of (including refraining from acquiring or disposing of) a financial product.

A person does not perform a financial adviser service in the following cases:

• (a) a teacher, lecturer, journalist, or State Services employee giving advice in the course of that occupation; or

• (b) a Minister of the Crown giving advice in the course of his or her duties as a Minister of the Crown; or

• (c) a member of Parliament giving advice in the course of his or her duties as a member of Parliament; or

• (d) a lawyer giving advice or making an investment transaction in the course of his or her professional practice as a lawyer if the advice or transaction is a necessary incident of legal practice; or

• (e) a chartered accountant giving advice or making an investment transaction in the course of his or her professional practice as a chartered accountant if the advice or transaction is a necessary incident of professional accounting practice; or

• (f) a tax agent giving advice or making an investment transaction in the course of his or her professional practice as a tax agent if the advice or transaction is a necessary incident of professional tax agency; or

• (g) a real estate agent giving advice or making an investment transaction in the course of his or her occupation as a real estate agent if the advice or transaction is a necessary incident of working as a real estate agent; or

• (h) a registered valuer giving advice in the course of his or her professional practice as a registered valuer if the advice is a necessary incident of the professional practice of a registered valuer; or

• (i) any of the following persons making an investment transaction in relation to a security:

  • (i) an issuer or a trustee (within the meaning of the Securities Act 1978 or the Unit Trusts Act 1960):

  • (ii) a nominated person of a trustee (within the meaning of the Unit Trusts Act 1960):

  • (iii) a nominee of a nominated person of a trustee (within the meaning of the Unit Trusts Act 1960):

  • (iv) a statutory supervisor (within the meaning of the Securities Act 1978):

  • (v) a security registrar appointed by the issuer; or

• (j) a person who only transmits money or other property without being able to apply the money or property for any other purpose; or

• (k) a member of the board of a Crown entity under the Crown Entities Act 2004 giving advice in the course of his or her duties as a member of the board and in accordance with the Crown Entities Act 2004 and the Crown entity’s own Act; or

• (l) a Crown organisation giving advice or making an investment transaction or providing a financial planning service in the course of its functions; or

• (m) the Reserve Bank of New Zealand (the Reserve Bank), a member of the board of the Reserve Bank, or an employee of the Reserve Bank, giving advice or making an investment transaction in the course of the functions of the Reserve Bank; or

• (n) a person giving advice, or making an investment transaction, in relation to a category 2 product or providing a financial planning service, if the advice is given, or the transaction is made, or the planning service is provided without charge in the course of a service offered by a non-profit organisation; or

• (o) an employee giving advice to, or making an investment transaction on behalf of, his or her employer in the course of his or her employment; or

• (p) an employer providing assistance to an employee with the implementation of a decision to acquire or dispose of a financial product made available through the employee's workplace unless the assistance includes or is accompanied by a recommendation or opinion as to the suitability of the financial product; or

• (q) a company giving advice to, or making an investment transaction on behalf of, a related company; or

• (r) the offeror or target company giving advice in the course of a takeover offer made under the Takeovers Code; or

• (s) an independent adviser giving advice in the exercise of that person’s functions under the Takeovers Code; or

• (t) a person giving general commentary relating to a financial market if that commentary is not directed to a specific person or persons; or

• (u) any other person or class of persons specified in the regulations giving advice or making an investment transaction or providing a financial planning service in circumstances specified in the regulations.

(1) Financial advice does not include anything contained in—

• (a) a prospectus; or

• (b) an investment statement; or

• (c) an authorised advertisement; or

• (d) a bank disclosure statement; or

• (e) a document or documents issued in lieu of a prospectus or investment statement in accordance with an exemption under the Securities Act 1978; or

• (f) a disclosure statement that is required under the Credit Contracts and Consumer Finance Act 2003.

(2) Whether advice is financial advice for the purposes of this Act is not affected by how the advice is given or communicated.

(3) For the avoidance of doubt, the provision of information, whether orally or in writing, is not financial advice unless accompanied by a recommendation, an opinion, or guidance.

Only the persons described in sections 15 to 17 may perform a financial adviser service.

An individual who is an authorised financial adviser may—

• (a) give financial advice in relation to a category 1 product; or

• (b) make an investment transaction in relation to a category 1 product; or

• (c) provide a financial planning service.

An individual who is registered may—

• (a) give financial advice in relation to a category 2 product; or

• (b) make an investment transaction in relation to a category 2 product.

(1) An individual (whether registered or not) who is an employee or agent of a qualified financial entity (the QFE) may, in the course of the QFE’s business,—

• (a) give financial advice in relation to a category 2 product; or

• (b) make an investment transaction in relation to a category 2 product.

(2) An individual (whether registered or not) who is an employee of a QFE may, in the course of the QFE's business,—

• (a) give financial advice in relation to a category 1 product of which the QFE is the issuer; or

• (b) make an investment transaction in relation to a category 1 product of which the QFE is the issuer.

(1) This section applies where one person (A) employs another person (B) as employee or agent to perform a financial adviser service in the course of A’s business for A’s client or clients (the financial adviser service).

(2) In any case to which this section applies,—

• (a) A must maintain registration for the duration of B’s employment or agency; and

• (b) B must not perform the financial adviser service if B knows or ought to know that A is not currently registered.

(3) A person who contravenes subsection (2) commits an offence (see section 116).

(1) This section applies where a person (A) employs another person (B) as employee to perform a financial adviser service in the course of A's business for A's client or clients.

(2) In any case to which this section applies, B must not be required to be a member of an approved dispute resolution scheme for the purposes of registration under the FSP Act.

(3) Subsection (2) applies no matter what the FSP Act says.

Nothing in this Act affects the rights of a person for whom a financial adviser performs a financial adviser service against the employer or principal of the financial adviser.

A disclosure obligation is an obligation to make disclosure under or in accordance with sections 22 to 31.

Subject to section 26, a financial adviser who performs a financial adviser service must make disclosure, in accordance with this Act and the regulations, to the person for whom the financial adviser service is performed before (or, if not practicable before, as soon as practicable after) performing the financial adviser service.

(1) An authorised financial adviser must disclose the information prescribed by regulations.

(2) For the purposes of this section, regulations may prescribe disclosure in relation to any or all of the following matters:

• (a) professional or business experience relevant to performance of a financial adviser service:

• (b) criminal convictions:

• (c) disciplinary proceedings:

• (d) adverse findings by a court or the Commission:

• (e) bankruptcy or other insolvency proceedings:

• (f) fees:

• (g) material interests, relationships, or associations:

• (h) remuneration:

• (i) financial products in relation to which a financial adviser service is performed:

• (j) procedures for handling a client’s money or other property:

• (k) indemnity insurance:

• (l) dispute resolution arrangements:

• (m) location of business premises:

• (n) matters required to be disclosed by the financial adviser’s terms and conditions of authorisation.

(3) Regulations made for the purposes of this section may prescribe different disclosure according to different classes of authorised financial adviser, financial adviser service, or client.

(1) Disclosure by an authorised financial adviser must be made in a disclosure statement.

(2) The disclosure statement must—

• (a) be in writing; and

• (b) state when it was prepared; and

• (c) state the name, address, and business telephone number of the financial adviser; and

• (d) be either received by the client, or delivered or sent to the client, at the client’s last known address or an address (including an electronic address) specified by the client for this purpose; and

• (e) comply with regulations prescribing the form of the statement.

(3) Subject to subsection (2), regulations may prescribe the form of the statement.

(1) Subject to section 26, a financial adviser who performs a financial adviser service in relation to a category 2 product must disclose the information prescribed by regulations.

(2) For the purposes of this section, regulations may prescribe disclosure in relation to all or any of the following matters:

• (a) the status of the financial adviser, for example, whether the financial adviser is authorised or not:

• (b) dispute resolution arrangements:

• (c) location of business premises:

• (d) telephone, email, and fax details.

(3) Regulations may prescribe the form of disclosure.

(1) This section applies if a financial adviser (A)—

• (a) is an employee or agent of a QFE; and

• (b) performs a financial adviser service in relation to a category 2 product in the course of the QFE’s business (the financial adviser service).

(2) In any case to which this section applies,—

• (a) before (or, if not practicable before, as soon as practicable after) A performs the financial adviser service, the QFE must disclose the information prescribed by regulations to the person for whom the financial adviser service is performed; and

• (b) A has no obligation of disclosure.

(3) For the purposes of this section, regulations may prescribe disclosure in relation to any or all of the following matters:

• (a) the QFE’s dispute resolution arrangements:

• (b) matters required to be disclosed by the QFE’s terms and conditions of grant of QFE status:

• (c) whether the QFE provides any other licensed service.

(4) Regulations may prescribe the form of disclosure.

Disclosure under a disclosure obligation must not be misleading, deceptive, or confusing at the time that the disclosure is made.

(1) Disclosure of the matters that must be disclosed under a disclosure obligation may be accompanied by disclosure of additional information.

(2) Additional disclosure that accompanies disclosure under a disclosure obligation must not be deceptive, misleading, or confusing at the time that it is made.

(1) Previous disclosure does not discharge a person’s disclosure obligation if the previous disclosure is out of date when the financial adviser service is performed.

(2) The previous disclosure is out of date if—

• (a) since the date of the disclosure there has been a material change in any matter that must be disclosed; and

• (b) a reasonable person in the position of the person for whom the financial adviser service is performed (A) would consider that the change would materially affect any of the following decisions by A:

  • (i) to proceed with a financial adviser service by the financial adviser in question (B):

  • (ii) to proceed with financial advice already given by B:

  • (iii) about the weight that A gives to financial advice by B:

  • (iv) to postpone or countermand the performance of a financial adviser service.

(3) Subsection (1) does not apply if—

• (a) the previous disclosure was by way of a disclosure statement; and

• (b) before the financial adviser service is performed, B gives A—

  • (i) a new disclosure statement that is up to date; or

  • (ii) additional written information that, when read with the original disclosure statement, updates the disclosure statement.

Any advertisement advertising financial adviser services by an authorised financial adviser must state that a disclosure statement is available, on request and free of charge.

(1) Subject to regulations being made under subsection (3), disclosure may be made by 2 or more financial advisers in a joint disclosure statement.

(2) A joint disclosure statement must—

• (a) comply with section 24(2)(a) to (c); and

• (b) comply with regulations prescribing the form of the joint disclosure statement; and

• (c) be either received by the client, or delivered or sent to the client, at the client's last known address or an address (including an electronic address) specified by the client for this purpose.

(3) Regulations may prescribe—

• (a) when, and subject to what terms and conditions, disclosure may be made in a joint disclosure statement; and

• (b) the form of a joint disclosure statement.

A conduct obligation is an obligation under sections 33 to 48.

A financial adviser, when performing a financial adviser service, must exercise the care, diligence, and skill that a reasonable financial adviser would exercise in the same circumstances, taking into account, but without limitation, the nature and requirements of the financial adviser’s client and the nature of the service performed for the client.

(1) A financial adviser must not engage in conduct in relation to the performance of a financial adviser service that is misleading or deceptive or likely to mislead or deceive.

(2) A person who knowingly or recklessly contravenes subsection (1) commits an offence (see section 118).

(1) A financial adviser must not advertise a financial adviser service in a way that is misleading, deceptive, or confusing.

(2) A person who knowingly or recklessly contravenes subsection (1) commits an offence (see section 119).

(1) A person (A) must not use the term sharebroker in advertising or promoting A as a financial adviser or advertising or promoting a financial adviser service unless A is a member of a registered exchange.

(2) A person who contravenes subsection (1) commits an offence (see section 120).

An authorised financial adviser must comply with the code.

(1) An authorised financial adviser (A) must not recommend to a person that that person acquire securities, and must not receive money from a person in respect of the acquisition of securities, if—

• (a) when the securities were or are offered for subscription, the offer was or is illegal; and

• (b) the illegality has not been remedied; and

• (c) A knows or ought to know that, when the securities were or are offered for subscription, the offer was or is illegal.

(2) A person who contravenes subsection (1) commits an offence (see section 121).

(1) An authorised financial adviser who receives money on behalf of a client receives the money on trust and must ensure that the money is paid promptly into a separate trust account.

(2) A person who contravenes subsection (1) commits an offence (see section 122).

(1) An authorised financial adviser who receives or holds the money or other property of a client on trust must account properly, or ensure that account is properly made, to the client for that money or property.

(2) A person who contravenes subsection (1) commits an offence (see section 123).

(1) An authorised financial adviser who receives or holds on trust the money of a client must keep, or ensure that there are kept, trust account records that disclose clearly the position of the money in the trust account.

(2) An authorised financial adviser who receives or holds on trust the property of a client other than money must keep, or ensure that there are kept, records that—

• (a) identify the property; and

• (b) show the date when the property was received; and

• (c) if the property has been disposed of, show when the property was disposed of and to whom.

(3) An authorised financial adviser must keep the records required by this section, or ensure that they are kept, in a manner that enables those records to be conveniently and properly audited or inspected.

(4) A person who contravenes any of subsections (1) to (3) commits an offence (see section 124).

(1) A person must not use or apply money or other property received or held on trust for a client by an authorised financial adviser in any way except—

• (a) as expressly directed by the client in writing; or

• (b) in accordance with section 39.

(2) A person who contravenes subsection (1) commits an offence (see section 125).

The money or other property of a client that is received or held by an authorised financial adviser on trust—

• (a) must not be used to pay the debts of any other creditor of the authorised financial adviser or of the authorised financial adviser's employer or principal; and

• (b) must not be attached or taken in execution under the order or process of any court at the instance of another creditor of the authorised financial adviser or of the authorised financial adviser's employer or principal.

For the purposes of this Part, money or property is deemed to be received or held by an authorised financial adviser (A) if it is held or received by A's employer or principal (B) in relation to a financial adviser service performed by A in the course of B's business.

(1) An authorised financial adviser must comply with the terms and conditions of his or her authorisation.

(2) A person who contravenes subsection (1) commits an offence (see section 126).

(1) Every QFE must comply with the terms and conditions of the grant of its QFE status.

(2) A person who contravenes subsection (1) commits an offence (see section 129).

(1) A QFE must not engage in conduct in relation to a financial adviser service by its employee or agent that is misleading or deceptive or likely to mislead or deceive.

(2) A person who knowingly or recklessly contravenes subsection (1) commits an offence (see section 130).

(1) A QFE must not advertise a financial adviser service in a way that is misleading, deceptive, or confusing.

(2) A person who knowingly or recklessly contravenes subsection (1) commits an offence (see section 131).

(1) This section applies if the Commission has reason to believe that a financial adviser is in breach of a disclosure or conduct obligation.

(2) The Commission may give the financial adviser notice of his or her alleged breach and, if the Commission does give a notice of breach, the Commission must also give the financial adviser a reasonable opportunity to respond.

(3) If the Commission concludes, after considering the financial adviser's response, that the financial adviser is in breach, the Commission may give the financial adviser a direction in writing.

(4) The direction may—

• (a) direct the financial adviser to comply with the conduct or disclosure obligation:

• (b) stipulate any steps that the financial adviser must take in order to comply with the obligation:

• (c) require the financial adviser to report to the Commission within 28 days of the date of the direction stating how and when the Commission's direction will be implemented.

(5) A financial adviser who fails to comply with a direction by the Commission commits an offence (see section 135).

(6) Nothing in this section precludes the Commission from exercising any of its other powers under this Act against a financial adviser.

An authorised financial adviser is an individual who is—

• (a) registered; and

• (b) authorised.

Any individual may apply to the Commission to be authorised.

An application to be authorised must be—

• (a) in the prescribed form (if any); and

• (b) accompanied by the prescribed fee (if any).

A person (A) is eligible to be authorised if—

• (a) the Commission is satisfied that—

  • (i) A is registered or complies with section 13(a) and (b) of the FSP Act; and

  • (ii) A is a person of good character; and

  • (iii) A meets the levels of competency, knowledge, and skills specified in the code for an authorised financial adviser; and

  • (iv) A is not debarred from applying for authorisation; and

• (b) the Commission—

  • (i) is not aware, after due inquiry, that A has been convicted by a court in New Zealand or elsewhere of an offence punishable by imprisonment for a term of 6 months or more; or

  • (ii) if the Commission is so aware, is satisfied that the commission of the offence does not reflect adversely on A’s fitness to act as an authorised financial adviser.

(1) If an applicant for authorisation is eligible, the Commission must authorise that person in respect of 1 or more of the following for a specified period:

• (a) performing a financial adviser service in relation to a category 1 product:

• (b) making an investment transaction in relation to a category 1 product:

• (c) providing a financial planning service.

(2) The authorisation may be subject to terms and conditions.

(3) If the Commission approves the application, the Commission must notify the applicant in writing of—

• (a) the authorisation; and

• (b) the terms and conditions (if any); and

• (c) the period of authorisation.

(4) If an applicant for authorisation is not eligible, the Commission must—

• (a) decline the application; and

• (b) notify the applicant in writing—

  • (i) of the decision and the reasons for it; and

  • (ii) of the applicant’s right of appeal against the decision.

(1) If the Commission authorises the applicant, the Commission must notify the Registrar in writing of—

• (a) the name and business address of the applicant; and

• (b) the terms and conditions (if any) of the authorisation; and

• (c) the period of authorisation.

(2) The Commission may publicly notify the authorisation and the other matters referred to in subsection (1) as it thinks fit.

(1) A person’s authorisation as an authorised financial adviser terminates when—

• (a) the period of authorisation (including any extension under section 58(5)) expires; or

• (b) the Commission receives a written request from the person requesting the Commission to cancel his or her authorisation; or

• (c) the person ceases to be registered; or

• (d) the Commission cancels his or her authorisation under section 59(2).

(2) The Commission must notify the Registrar in writing of termination of authorisation under subsection (1)(a), (b), or (d).

(1) An authorised financial adviser may apply for renewal of authorisation.

(2) An application for renewal of authorisation must be—

• (a) made in the prescribed form (if any); and

• (b) accompanied by the prescribed fee (if any).

(3) Subject to subsection (4), sections 52 to 56 apply, with any necessary modifications, to an application for renewal of authorisation.

(4) In addition to the matters specified in section 54, the Commission must be satisfied that the applicant for renewal has complied with the minimum professional standards for authorised financial advisers prescribed by the code.

(5) If an application for renewal of authorisation has been made but not determined before the date on which the authorisation is due to expire, the authorisation continues in force until the application is determined.

(6) The renewal of authorisation takes effect from the date of expiry of the previous authorisation.

(1) This section applies if the Commission is satisfied that an authorised financial adviser (A)—

• (a) has ceased to be eligible for authorisation; or

• (b) has breached or is in breach of this Act (excluding section 37) or the regulations; or

• (c) has breached or is in breach of a term or condition of his or her authorisation; or

• (d) is the subject of a recommendation by the disciplinary committee under section 101(3)(a), (b), or (c); or

• (e) has failed to pay a fee or levy as required by this Act or the regulations.

(2) In any case to which this section applies, the Commission may, after following the procedure set out in section 60 and subject to subsection (3),—

• (a) cancel the authorisation; or

• (b) cancel the authorisation and debar A for a specified period from re-applying for authorisation; or

• (c) suspend the authorisation for a specified period or until A does any thing that the Commission may specify; or

• (d) amend the terms and conditions of the authorisation; or

• (e) make no order.

(3) The Commission may only take 1 of the actions specified in subsection (2).

(4) If the Commission cancels or suspends the authorisation of an authorised financial adviser, the Commission must notify the Registrar in writing of the cancellation or suspension, and, in the case of suspension, the period of suspension.

(5) The Commission may publicly notify the action it takes under subsection (2) as it sees fit.

The Commission must not take any of the actions specified in section 59(2) unless it has first—

• (a) informed the person concerned in writing as to why it may take any of those actions; and

• (b) given that person or his or her representative a reasonable opportunity to make written submissions and be heard on the question.

(1) This section applies if the Commission has reason to believe that an authorised financial adviser is in breach of the terms and conditions of his or her authorisation (the terms and conditions).

(2) The Commission may give the financial adviser notice of his or her alleged breach and, if the Commission does give a notice of breach, the Commission must also give the financial adviser a reasonable opportunity to respond.

(3) If the Commission concludes, after considering the financial adviser’s response, that the financial adviser is in breach, the Commission may give the financial adviser a direction in writing.

(4) The direction may—

• (a) direct the financial adviser to comply with the terms and conditions:

• (b) stipulate any steps that the financial adviser must take in order to comply with the terms and conditions:

• (c) require the financial adviser to report to the Commission within 28 days of the date of the direction stating how and by when the Commission’s direction will be implemented.

(5) An authorised financial adviser who fails to comply with a direction by the Commission commits an offence (see section 127).

(6) Nothing in this section precludes the Commission from exercising any of its other powers under this Act against an authorised financial adviser.

(1) At the end of a period of suspension of authorisation, the person’s authorisation is immediately revived, unless his or her authorisation has been further suspended or has been cancelled.

(2) Suspension or cancellation under section 59(2) is effective when a written notice of the suspension or cancellation is sent to the person concerned by the Commission.

A QFE is an entity that—

• (a) is registered; and

• (b) has QFE status.

Any entity may apply to the Commission for QFE status.

An application for QFE status must be—

• (a) in the prescribed form (if any); and

• (b) accompanied by the prescribed fee (if any).

An entity is eligible for QFE status if the Commission is satisfied that—

• (a) the entity is registered or is entitled to be registered; and

• (b) the entity is not debarred from applying for QFE status; and

• (c) on the grant of QFE status and at all times while a QFE, the entity has the capacity to, and will,—

  • (i) discharge its ongoing compliance obligations under section 76 and all other obligations on it under this Act or the regulations; and

  • (ii) comply with the terms and conditions (if any) of the grant of QFE status.

(1) If an applicant for QFE status is eligible, the Commission must approve the application and grant the entity QFE status.

(2) The grant of QFE status may be subject to terms and conditions.

(3) If the Commission approves the application, the Commission must notify the entity in writing of —

• (a) the grant of QFE status; and

• (b) the terms and conditions (if any); and

• (c) the period for which QFE status has been granted.

(4) If an applicant for QFE status is not eligible, the Commission must—

• (a) decline the application; and

• (b) notify the entity in writing of—

  • (i) the decision and the reasons for it; and

  • (ii) the entity’s right of appeal against the decision.

(1) If the Commission grants the entity QFE status, the Commission must notify the Registrar in writing of the period for which QFE status has been granted.

(2) The Commission may publicly notify the grant of QFE status and the other matters referred to in subsection (1) as it thinks fit.

(1) An entity’s QFE status terminates when—

• (a) the period of grant of QFE status expires; or

• (b) the Commission receives a written request from the QFE requesting the Commission to cancel its QFE status; or

• (c) the entity ceases to be registered; or

• (d) the Commission cancels its QFE status under section 71(2).

(2) The Commission must notify the Registrar in writing of the termination of QFE status under subsection (1)(a), (b), or (d).

(1) A QFE may apply for renewal of QFE status.

(2) An application for renewal of QFE status must be—

• (a) made in the prescribed form (if any); and

• (b) accompanied by the prescribed fee (if any).

(3) Sections 64 to 68 apply, with any necessary modifications, to an application for renewal of QFE status.

(4) If an application for renewal of QFE status has been made but not determined before the date on which the QFE status is due to expire, the QFE status continues until the application is determined.

(5) The renewal of QFE status takes effect from the date of expiry of the previous grant of QFE status.

(1) This section applies if the Commission is satisfied that a QFE—

• (a) has ceased to be eligible for QFE status; or

• (b) has breached or is in breach of this Act or the regulations; or

• (c) has breached or is in breach of a term or condition of its grant of QFE status; or

• (d) has failed to comply with a direction given to it by the Commission under section 73; or

• (e) has failed to pay a fee or levy as required by this Act or the regulations.

(2) In any case to which this section applies, the Commission may, after following the procedure set out in section 72 and subject to subsections (3) and (4),—

• (a) cancel the QFE’s status as a QFE; or

• (b) cancel the QFE’s status as a QFE and debar the entity for a specified period from re-applying for QFE status; or

• (c) suspend the QFE’s status as a QFE for a specified period or until the entity does any thing that the Commission may specify; or

• (d) amend the terms and conditions of the QFE’s grant of status; or

• (e) order that the QFE pay a fine not exceeding $50,000; or

• (f) censure the QFE; or

• (g) take no further action.

(3) The Commission may only take 1 of the actions specified in subsection (2), except that it may order the QFE to pay a fine not exceeding $50,000 in addition to taking an action under subsection (2)(d) or (f).

(4) The Commission must not order the QFE to pay a fine in relation to an act or omission that constitutes an offence for which the QFE has been convicted by a court.

(5) If the Commission cancels or suspends the QFE status of a QFE, the Commission must notify the Registrar in writing of the cancellation or suspension, and, in the case of suspension, the period of suspension.

The Commission must not take any of the actions specified in section 71(2) unless it has first—

• (a) informed the QFE in writing as to why it may take any of those actions; and

• (b) given the QFE or its representative a reasonable opportunity to make written submissions and be heard on the question.

(1) This section applies if the Commission has reason to believe that a QFE is in breach of a disclosure or conduct obligation.

(2) The Commission may give the QFE notice of its alleged breach and, if the Commission does give a notice of breach, the Commission must also give the QFE a reasonable opportunity to respond.

(3) If the Commission concludes, after considering the QFE’s response, that the QFE is in breach, the Commission may give the QFE a direction in writing.

(4) The direction may—

• (a) direct the QFE to comply with the disclosure or conduct obligation:

• (b) stipulate any steps that the QFE must take in order to comply with the disclosure or conduct obligation:

• (c) require the QFE to report to the Commission within 28 days of the date of the direction stating how and by when the Commission’s direction will be implemented.

(5) A QFE that fails to comply with a direction by the Commission commits an offence (see section 132).

(6) Nothing in this section precludes the Commission from exercising any of its other powers under this Act against a QFE.

(1) A fine imposed by the Commission under section 71(2)(e) is recoverable in any court as a debt due to the Commission.

(2) At the end of a period of suspension of QFE status, a QFE’s status is immediately revived, unless its QFE status has been further suspended or has been cancelled.

(3) Suspension or cancellation is effective when a written notice of the suspension or cancellation is sent to the QFE by the Commission.

A financial adviser who performs a financial adviser service in relation to a category 2 product in his or her capacity as an employee or agent of a QFE is exempt from any liability under this Act for contravention of a financial adviser obligation.

(1) A QFE must—

• (a) ensure compliance by the QFE, its employees, and its agents with the terms and conditions of the grant of QFE status; and

• (b) in relation to its employees and agents who are financial advisers, ensure compliance by each of those persons with his or her financial adviser obligations; and

• (c) in relation to employees and agents who perform a financial adviser service that, by virtue of sections 14, 15, and 17, only an authorised financial adviser may perform,—

  • (i) ensure that each of those persons is authorised; and

  • (ii) provide the Commission with a list of the names of each of those persons; and

  • (iii) update that list as changes in the list occur; and

• (d) provide an annual report to the Commission in accordance with section 77; and

• (e) comply with a direction by the Commission given under section 73; and

• (f) comply with its other obligations under this Act and the regulations.

(2) A QFE that contravenes subsection (1)(c) commits an offence (see section 133).

(1) Within 5 months after the end of its financial year, a QFE must send to the Commission a written report in respect of that year (the reporting year)—

• (a) stating the name of each person who, as its agent, was a financial adviser in the reporting year; and

• (b) stating the name of each person who, as its employee or agent, was an authorised financial adviser in the reporting year; and

• (c) certifying that the QFE has complied with its obligations under this Act and the regulations, and with the terms and conditions of the grant of QFE status; and

• (d) if the QFE has not complied with its obligations under this Act and the regulations, and with the terms and conditions of the grant of QFE status, stating those respects in which it has failed to comply; and

• (e) if the QFE is aware of any breach by an employee or agent of a financial adviser obligation, stating—

  • (i) the name of that person; and

  • (ii) the nature of that person’s breach or breaches; and

• (f) containing any other information required by the regulations; and

• (g) containing the information (if any) that is required to be contained in the report by the terms and conditions of the grant of QFE status.

(2) The report must be signed by a principal officer of the QFE.

(3) A QFE that contravenes subsection (1) commits an offence (see section 134).

(1) There must be a Commissioner for Financial Advisers (the Commissioner).

(2) The Commissioner is a member of the Commission as provided in section 11(3C) of the Securities Act 1978.

(3) The Commissioner must be appointed by the Governor-General on the recommendation of the Minister.

(4) The Minister must not recommend a person for appointment as Commissioner unless, in the Minister’s opinion, that person is qualified for appointment, having regard to the functions and duties of the Commission, whether under this Act or any other enactment.

(5) For the purposes of subsection (4), a person is qualified for appointment by virtue of that person’s knowledge of, or experience in, the financial adviser industry or any other industry, commerce, economics, law, accountancy, public administration, or securities.

(6) This section must be read subject to the following:

• (a) subsection (3) applies despite section 28(1)(b) of the Crown Entities Act 2004; and

• (b) subsection (4) applies despite section 11(4) of the Securities Act 1978; and

• (c) subsections (4) and (5) do not limit section 29 of the Crown Entities Act 2004.

The functions of the Commissioner are as follows:

• (a) to appoint members of the code committee:

• (b) to review the code and propose changes to the code as required:

• (c) to act as chairperson of the disciplinary committee:

• (d) to exercise and perform such other functions, powers, and duties as are conferred or imposed on the Commissioner by or under this Act or any other enactment.

The Commissioner must establish a code committee.

The functions of the code committee are—

• (a) first, to produce a draft code for approval by the Commissioner; and

• (b) subsequently, to review the code from time to time; and

• (c) to recommend to the Commissioner changes to the code as the code committee thinks fit.

(1) The Commissioner may at any time—

• (a) appoint a member of the code committee; or

• (b) discharge a member of the code committee.

(2) The appointment of a member of the code committee must be for a specified period, but a member may be discharged under subsection (1)(b) before his or her period of appointment has expired.

(3) The code committee must have not less than 7 members and not more than 11 members, and the Commissioner must ensure that the number of current members does not fall below 7.

(4) The Commissioner must appoint as members of the code committee—

• (a) 1 person who, in the Commissioner’s opinion, is qualified for appointment by virtue of his or her knowledge of, and experience and competency in relation to, consumer affairs; and

• (b) other persons who, in the Commissioner’s opinion, are each qualified for appointment by virtue of their individual knowledge of, and experience and competency in relation to, the financial adviser industry.

(5) A member of the code committee may resign by notice in writing to the Commissioner.

(1) Meetings of the code committee must be held at the times and places as the code committee or the chairperson from time to time decides.

(2) The code committee must elect 1 of its members as chairperson.

(3) The quorum for a meeting of the code committee is 5 members.

(4) Every question before the code committee must be determined by a majority of the votes of the members present or otherwise.

(5) The chairperson of the code committee has a deliberative vote and, in the case of an equality of votes, a casting vote.

(6) Except as provided in this section and in any regulations made under this Act, the code committee may regulate its own procedure.

Clause 15 of Schedule 5 of the Crown Entities Act 2004 (Schedule 5) applies as if the code committee were a committee appointed by the Commission under clause 14 of Schedule 5 and with all other necessary modifications.

(1) The code must provide for minimum standards of professional conduct that must be demonstrated by authorised financial advisers, including minimum standards—

• (a) of competence; and

• (b) of knowledge and skills; and

• (c) of ethical behaviour; and

• (d) of client care.

(2) The code must also provide for continuing professional training for authorised financial advisers, including specification of minimum requirements that an authorised financial adviser must meet for the purpose of continuing professional training.

(3) The code may specify different standards for different classes of authorised financial adviser.

(1) The code committee must prepare a draft code.

(2) In preparing the draft code, the code committee must—

• (a) consult any persons that it reasonably considers to be representative of the financial adviser industry; and

• (b) consult with interest groups within the financial adviser industry; and

• (c) allow an opportunity for any person affected by the code to make submissions to the code committee.

(1) After receiving the draft code prepared by the code committee, the Commissioner must—

• (a) approve it; or

• (b) decline to approve it.

(2) The Commissioner must approve the draft code prepared by the code committee if the Commissioner is satisfied that—

• (a) a majority of the code committee has approved the draft code; and

• (b) the code committee has complied with its obligations under section 87(2); and

• (c) the draft code is consistent with this Act.

(3) A failure by the code committee to comply with its obligations under subsection 87(2) does not affect the validity of the code.

(4) This section is subject to section 89.

(1) If the Commissioner is not satisfied as to a matter specified in section 88(2),—

• (a) the Commissioner must direct the code committee to revise the draft code or undertake further consultation or receive submissions, as necessary; and

• (b) the code committee must as soon as practicable comply with the Commissioner's direction.

(2) If the Commissioner considers that the draft code is not consistent with this Act, the Commissioner must, in directing the code committee to revise the draft code, state in what respects he or she considers that the draft code is not consistent.

(1) After receiving a revised draft code, the Commissioner must—

• (a) approve the revised draft code; or

• (b) if the Commissioner considers that the draft code requires further amendment to be consistent with this Act,—

  • (i) make any amendments to the draft code that the Commissioner considers necessary; and

  • (ii) approve the draft code as amended.

(2) Before making any amendment to the draft code under this section, the Commissioner must—

• (a) advise the code committee of the Commissioner’s intention to do so; and

• (b) give the code committee a reasonable opportunity to make submissions on the matter; and

• (c) consider those submissions.

The Commissioner must approve the draft code within 90 days of receiving the draft code or, if section 89 applies, within 90 days of receiving the revised draft code.

(1) After approving the draft code or after the 90-day deadline for approval specified in section 91 has expired, the Commissioner must forward the draft code to the Minister for the Minister’s approval.

(2) The Minister must approve the draft code unless the Minister considers that it is not consistent with this Act.

(3) If the Minister is not satisfied that the draft code is consistent with this Act, the Minister must implement the procedure set out in sections 89 and 90 with necessary modifications.

(4) For the purposes of subsection (3), a reference in sections 89 and 90 to the Commissioner must be read as a reference to the Minister.

The Minister must approve the draft code within 90 days of receiving the draft code or, if section 92(3) applies, within 90 days of receiving the revised draft code.

(1) After the Minister has approved the draft code or after the 90-day deadline for approval specified in section 93 has expired, the Commissioner must give notice in the Gazette of the date on which the code comes into force, and the code comes into force on that date.

(2) The date on which the code comes into force must not be less than 28 days after the date of notification in the Gazette.

(3) The code is a regulation for the purposes of the Regulations (Disallowance) Act 1989.

(1) A change to the code may be proposed by—

• (a) the code committee; or

• (b) the Commissioner; or

• (c) the Minister.

(2) The procedure for changing the code is the same as the procedure set out in sections 87 to 94 for the preparation and approval of the draft code.

(1) Any person may complain to the Commission about the conduct of another person in that second person’s capacity as a financial adviser.

(2) The Commissioner may initiate a complaint.

(1) After receiving a complaint, the Commission must investigate the complaint if it is practicable to do so having regard to—

• (a) the nature and number of complaints to be investigated; and

• (b) the Commission's regulatory priorities as reflected in its statement of intent; and

• (c) the Commission's available resources.

(2) The Commission need not investigate a complaint if is satisfied that—

• (a) the complaint is vexatious; or

• (b) the complaint is not sufficiently serious to warrant investigation.

The Commission must refer a complaint about an authorised financial adviser to the disciplinary committee if, in the Commission’s opinion, the conduct complained of amounts to a breach of the code.

If the Commission refers a complaint about an authorised financial adviser to the disciplinary committee, and the disciplinary committee considers that a hearing is necessary to deal with the complaint, the disciplinary committee must serve a written notice of the complaint on the financial adviser.

The Commission’s notice of complaint to the financial adviser concerned (A) must—

• (a) state that the disciplinary committee considers that there is reason to believe that A may have breached the code; and

• (b) contain the particulars that are reasonably necessary to clearly inform A of the nature of the contravention; and

• (c) specify a date, which must not be sooner than 20 working days after the date of service of the notice, on which the disciplinary committee intends to hear the matter.

(1) In this section, A is the person who is the subject of the complaint.

(2) The disciplinary committee may take any of the actions referred to in subclause (3) if it is satisfied that A has breached the code.

(3) In any case to which subsection (2) applies, the disciplinary committee may—

• (a) recommend that the Commission cancels A’s authorisation:

• (b) recommend that the Commission—

  • (i) cancels A’s authorisation; and

  • (ii) debars A for a specified period from applying to be re-authorised:

• (c) recommend that the Commission suspends A's authorisation for a period of no more than 12 months or until A meets specified conditions relating to the authorisation (but, in any case, not for a period of more than 12 months):

• (d) censure A:

• (e) order that A may, for a period not exceeding 3 years, perform a financial adviser service only subject to any conditions as to employment, supervision, or otherwise that the disciplinary committee may specify in the order:

• (f) order that A undertake training specified in the order:

• (g) order that A must pay a fine not exceeding $10,000:

• (h) take no action.

(4) No fine may be imposed under subsection (3)(g) in relation to an act or omission that constitutes an offence for which A has been convicted by a court.

(5) In any case to which subsection (2) applies, the disciplinary committee may order that A must pay costs and expenses of, and incidental to, the investigation by the Commission and the disciplinary committee’s proceeding.

(6) The disciplinary committee may publicly notify the action in any way that it thinks fit.

(7) This section applies whether or not A is an authorised financial adviser at the time of the complaint, the investigation, or the disciplinary proceeding.

The disciplinary committee must not take any of the actions specified in section 101(3) unless it has first—

• (a) informed the person concerned in writing as to why it may take any of those actions; and

• (b) given that person or his or her representative a reasonable opportunity to make written submissions and be heard on the question.

The Minister must establish a disciplinary committee.

The functions of the disciplinary committee are to—

• (a) conduct disciplinary proceedings arising out of complaints regarding authorised financial advisers referred to it by the Commission; and

• (b) take any of the actions referred to in section 101(3) as a result of disciplinary proceedings.

(1) The Minister may at any time appoint a member of the disciplinary committee.

(2) The appointment of a member of the disciplinary committee must be for a specified period.

(3) The Minister must appoint the Commissioner as the chairperson of the disciplinary committee.

(4) The disciplinary committee must have between not less than 4 members and not more than 6 members including the chairperson, and the Minister must ensure that the number of current members does not fall below 4.

(5) Apart from the chairperson, the Minister must appoint as members of the disciplinary committee—

• (a) at least 1 member who works or has worked in the financial adviser industry; and

• (b) at least 1 member who is independent of the financial adviser industry; and

• (c) at least 1 member who is a lawyer with not less than 7 years' legal experience.

(6) A member of the disciplinary committee may resign by notice in writing to the Minister.

(1) Meetings of the disciplinary committee must be held at the times and places as the disciplinary committee or the chairperson from time to time decides.

(2) The quorum for a meeting of the disciplinary committee is 3 members.

(3) Every question before the disciplinary committee must be determined by a majority of the votes of the members present at the meeting.

(4) The chairperson of the disciplinary committee has a deliberative vote and, in the case of an equality of votes, a casting vote.

(5) Except as provided for in this Act and in any regulations made under this Act, the disciplinary committee may regulate its own procedure.

(1) In a disciplinary proceeding the disciplinary committee may—

• (a) receive evidence on oath (and for that purpose a member of the disciplinary committee may administer an oath):

• (b) permit a person appearing as a witness before it to give evidence by tendering a written statement and verifying that statement by oath, statutory declaration, or otherwise.

(2) A hearing before the disciplinary committee in a disciplinary proceeding is a judicial proceeding for the purposes of sections 108 and 109 of the Crimes Act 1961.

(1) A District Court Judge may, on the application of the disciplinary committee or the person to whom the proceedings relate, give a certificate authorising the disciplinary committee to issue a summons under section 109.

(2) A District Court Judge must not give a certificate under subsection (1) unless satisfied that—

• (a) the evidence of the witness is or may be material to the hearing of a disciplinary matter by the disciplinary committee; and

• (b) it is necessary or desirable that the summons be issued to compel the attendance of the witness at the hearing.

(1) The disciplinary committee must, on production of a certificate referred to in section 108, issue a summons to a person requiring that person to attend a hearing before the disciplinary committee and to do all or any of the following:

• (a) give evidence:

• (b) give evidence under oath:

• (c) produce documents, things, or information, or any specified documents, things, or information, in the possession or control of that person, that are relevant to the hearing.

(2) The summons must be in writing, be signed by the chairperson of the disciplinary committee, and state—

• (a) the date and time when, and the place where, the person must attend; and

• (b) the documents, things, or information that the person is required to bring and produce to the disciplinary committee; and

• (c) the entitlement to be tendered or paid a sum in respect of witnesses' fees, allowances, and expenses; and

• (d) the penalty for failing to attend.

(3) The disciplinary committee may require that any documents, things, or information produced under this section be verified by oath, statutory declaration, or otherwise.

(1) A summons may be served—

• (a) by delivering it personally to the person summoned; or

• (b) by posting it to the person summoned at that person's usual place of residence.

(2) A summons must,—

• (a) if it is to be served under subsection (1)(a), be served at least 48 hours before the attendance of the witness is required:

• (b) if it is to be served under subsection (1)(b), be served at least 10 days before the attendance of the witness is required.

(3) A summons that is posted is treated as having been served when it would have been delivered in the ordinary course of post.

(1) A witness appearing before the disciplinary committee under a summons is entitled to be paid witnesses' fees, allowances, and expenses in accordance with the scales prescribed by regulations under the Summary Proceedings Act 1957.

(2) The person requiring attendance of the witness must pay or tender to the witness the fees, allowances, and expenses at the time the summons is served or at some other reasonable time before the hearing.

(1) Every person who does the following things has the same privileges as witnesses have in a court:

• (a) provides documents, things, or information to the disciplinary committee in relation to a disciplinary matter; or

• (b) gives evidence or answers questions at a hearing of the disciplinary committee in relation to a disciplinary matter.

(2) Every counsel appearing before the disciplinary committee in relation to a disciplinary matter has the same privileges and immunities as counsel in a court.

Clause 15 of Schedule 5 of the Crown Entities Act 2004 (Schedule 5) applies as if the disciplinary committee were a committee appointed by the Commission under clause 14 of Schedule 5 and with all other necessary modifications.

(1) A person who performs a financial adviser service without being registered commits an offence and is liable on summary conviction,—

• (a) in the case of an individual, to a fine not exceeding $5,000:

• (b) in the case of an entity, to a fine not exceeding $10,000.

(2) A person (A) has a defence to a charge under subsection (1) if A proves on a balance of probabilities that—

• (a) A does not know, and ought not reasonably to know, that A is not registered; or

• (b) A performs the financial adviser service as the employee or agent of a former QFE and A does not know, and ought not reasonably to know, that the former QFE has ceased to be a QFE; or

• (c) the financial adviser service is performed by A's employee or agent, and the employee or agent is registered.

(3) A person who performs a financial adviser service without being registered does not commit an offence under section 11(2) of the FSP Act.

(1) Subject to subsection (2), a person who, without being authorised, performs a financial adviser service that under this Act only an authorised financial adviser may perform commits an offence and is liable on summary conviction to a fine,—

• (a) in the case of an individual, not exceeding $10,000:

• (b) in the case of an entity, not exceeding $50,000.

(2) Subsection (1) does not apply to an individual who is an employee or agent of a QFE and who, in the course of the QFE’s business, performs a financial adviser service in relation to a category 1 product or provides a financial planning service without being authorised.

(3) A person (A) has a defence to a charge under subsection (1) if A proves on a balance of probabilities that the financial adviser service is performed by A's employee or agent, and the employee or agent is authorised.

(1) A person who contravenes section 18(2)(a) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

(2) A person who contravenes section 18(2)(b) commits an offence and is liable on summary conviction to a fine not exceeding $10,000.

A person who knowingly or recklessly contravenes a disclosure obligation commits an offence and is liable on summary conviction to a fine,—

• (a) in the case of an individual, not exceeding $100,000:

• (b) in the case of a QFE, not exceeding $300,000.

A person who knowingly or recklessly contravenes section 34(1) commits an offence and is liable on summary conviction to a fine not exceeding $100,000.

A person who knowingly or recklessly contravenes section 35(1) commits an offence and is liable on summary conviction to a fine not exceeding $100,000.

A person who contravenes section 36(1) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

A person who contravenes section 38(1) commits an offence and is liable on summary conviction to a fine not exceeding $100,000.

A person who contravenes section 39(1) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

A person who contravenes section 40(1) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

A person who contravenes any of section 41(1) to (3) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

A person who contravenes section 42(1) commits an offence and is liable on summary conviction to a fine, —

• (a) in the case of an individual, not exceeding $5,000:

• (b) in the case of an entity, not exceeding $25,000.

A person who contravenes section 45(1) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

A person who fails to comply with a direction of the Commission given under section 61(3) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

A person who contravenes a condition of an order made by the disciplinary committee under section 101(3)(e) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

A QFE that contravenes section 46(1) commits an offence and is liable on summary conviction to a fine not exceeding $25,000.

A QFE that knowingly or recklessly contravenes section 47(1) commits an offence and is liable on summary conviction to a fine not exceeding $300,000.

A QFE that knowingly or recklessly contravenes section 48(1) commits an offence and is liable on summary conviction to a fine not exceeding $300,000.

A QFE that fails to comply with a direction of the Commission given under section 73(3) commits an offence and is liable on summary conviction to a fine not exceeding $25,000.

(1) A QFE that contravenes section 76(1)(c) commits an offence and is liable on summary conviction to a fine not exceeding $50,000.

(2) It is a defence to a charge under subsection (1) that a QFE has contravened section 76(1)(c) if the QFE proves on a balance of probabilities that the QFE believed on reasonable grounds that the financial adviser in question did not perform a financial adviser service that only an authorised financial adviser may perform.

A QFE that contravenes section 77(1) commits an offence and is liable on summary conviction to a fine not exceeding $25,000.

A person who fails to comply with a direction of the Commission given under section 49(3) commits an offence and is liable on summary conviction to a fine not exceeding $5,000.

(1) A person (A) commits an offence if A has, for the purpose of obtaining authorisation or the grant of QFE status, either for A or for any other person,—

• (a) either orally or in writing, made any declaration or representation knowing it to be false or misleading in a material particular; or

• (b) produced to the Commission or made use of any document knowing it to contain a declaration or representation referred to in paragraph (a); or

• (c) produced to the Commission or made use of any document knowing that it was not genuine.

(2) A person who commits an offence under this section is liable on summary conviction to a fine,—

• (a) in the case of an individual, not exceeding $100,000:

• (b) in the case of an entity, not exceeding $300,000.

(1) A person summoned under section 109 commits an offence if he or she, without sufficient cause,—

• (a) fails to attend in accordance with the summons; or

• (b) does not give evidence when required to do so; or

• (c) does not give evidence under oath when required to do so; or

• (d) does not answer any question that is lawfully asked by the disciplinary committee; or

• (e) does not provide any documents, things, or information that the summons requires the person to provide.

(2) A person who commits an offence under this section is liable on summary conviction to a fine not exceeding $5,000.

(3) A person must not be convicted of an offence under this section if witnesses' fees, allowances, and expenses to which the person is entitled under section 111 have not been paid or tendered to him or her.