Reprint as at 1 April 2014

Financial Advisers Act 2008

Public Act2008 No 91
Date of assent27 September 2008
Commencementsee section 2

Note

Changes authorised by subpart 2 of Part 2 of the Legislation Act 2012 have been made in this official reprint.

Note 4 at the end of this reprint provides a list of the amendments incorporated.

This Act is administered by the Ministry of Business, Innovation, and Employment.


Contents

1 Title

2 Commencement

Part 1
Preliminary provisions

3 Purpose of Act

4 Overview of Act

5 Interpretation

5A Who are clients

5B Who are retail clients

5C Who are wholesale clients

5D Who are eligible investors

5E Acceptance of certification

5F Revocation of certification

5G How to opt out of being wholesale client

5H Giving revocation of certification or notification of opt out

5I Meaning of acting on behalf of B's business and acting through A

6 Act binds the Crown

Part 2
Financial advisers and their disclosure and conduct obligations

7 Outline

Subpart 1Key definitions for financial adviser services

What are financial adviser services

8 Who is financial adviser

9 What is financial adviser service

10 When person gives financial advice

11 When person provides investment planning service

12 When person provides discretionary investment management service

13 Exemption for incidental service

14 Other exemptions

When financial adviser service is personalised service or class service

15 When financial adviser service is personalised service or class service

Subpart 1ARestrictions on providing financial adviser services

16 Types of financial adviser

Restrictions on providing financial adviser services

17 Who may provide financial adviser service

18 Who is permitted to provide personalised service to retail clients

19 Who is permitted to provide class service to retail clients

20 Who is permitted to provide financial adviser service to wholesale clients

Restrictions on holding out

20A Who may hold themselves out as authorised financial adviser

20B Who may hold themselves out as financial planner or investment planner

20C Who may hold themselves out as QFE or having QFE status

Persons acting in course of business of employers and principals

20D Application of FSP Act to employees, etc

20E Who must be member of dispute resolution scheme

20F Who is responsible for financial adviser obligations

Subpart 2Financial advisers’ disclosure and conduct obligations

Disclosure obligations for personalised services for retail clients

21 What is disclosure obligation and when does it apply

22 Financial adviser must make disclosure before providing personalised service to retail client

23 What financial adviser must disclose

24 Disclosure statement

25 QFE must make disclosure before personalised service provided to retail client

26 Disclosure by qualifying financial entity [Repealed]

27 Disclosure must not be misleading, deceptive, or confusing

28 Disclosure of additional information

29 No compliance with disclosure obligations if disclosure out of date

30 Advertisement advertising financial adviser services by authorised financial adviser must refer to disclosure statement

31 Disclosure by 2 or more financial advisers in joint disclosure statement

Conduct obligations

32 What is conduct obligation and when does it apply

Conduct obligations that apply to all financial advisers

[Repealed]

33 Financial adviser must exercise care, diligence, and skill

34 Financial adviser must not engage in misleading or deceptive conduct

35 Advertisement by financial adviser must not be misleading, deceptive, or confusing

36 Regulations may impose specific conduct obligations for class services to retail clients

Conduct obligations that apply to authorised financial advisers only

37 Authorised financial adviser must comply with code

38 Authorised financial adviser must not recommend acquisition of securities if offer for subscription illegal

39 Authorised financial adviser must pay client’s money into separate trust account [Repealed]

40 Authorised financial adviser must account for client’s money or property [Repealed]

41 Authorised financial adviser must keep records of client’s money and other property [Repealed]

42 Restrictions on use of client’s money or property [Repealed]

43 Protection of client’s money or property held on trust [Repealed]

44 Meaning of received or held [Repealed]

45 Authorised financial adviser must comply with terms and conditions of his or her authorisation

45A Authorised financial adviser may report breach of Act to FMA

Conduct obligations related to QFEs

46 QFE must comply with terms and conditions of grant of QFE status

47 QFE or member of QFE group must not engage in misleading or deceptive conduct in relation to financial adviser service by employee, agent, or nominated representative

48 Advertisement by QFE or member of QFE group in relation to financial adviser service must not be misleading, deceptive, or confusing

FMA's direction in respect of breach of disclosure or conduct obligation

49 FMA may give financial adviser direction in respect of breach of disclosure or conduct obligation

Part 3
Authorised financial advisers and qualifying financial entities

50 Outline of this Part

Subpart 1Authorised financial advisers

51 Who is authorised financial adviser

52 Who may apply to be authorised

53 Application to be authorised

54 Eligibility to be authorised

55 FMA must approve or decline application for authorisation

55A Variation of terms and conditions and period of authorisation

56 FMA must notify Registrar of authorisation

57 Termination of authorisation

58 Renewal of authorisation

FMA's powers in relation to default by authorised financial adviser

59 FMA's powers in relation to default by authorised financial adviser

60 Reasonable opportunity to be heard

61 FMA may give authorised financial adviser direction

62 Other provisions concerning FMA's powers in relation to default by authorised financial adviser

Subpart 2Qualifying financial entities

63 What is qualifying financial entity (QFE)

64 Who may apply for QFE status

65 Application for QFE status

66 Eligibility for QFE status

67 FMA must approve or decline application for QFE status

67A Associated entities may be subject to special terms and conditions in certain cases

68 Determination of application

69 Name of QFE group

70 FMA must notify Registrar of grant of QFE status

Commission’s powers in relation to default by QFE

[Repealed]

71 Addition of associated entities

72 Termination of status of associated entity

73 Certification of QFE group

74 Nominated representatives of QFEs or partner entities

Liability of employee or agent

[Repealed]

75 Variation of terms and conditions and period of grant of QFE status

75A Termination of QFE status

75B FMA may designate certain QFE products as beyond scope of QFE advisers

75C Renewal of QFE status

FMA's powers in relation to default by QFE or by members of QFE group

75D FMA's powers in relation to QFE default

75E Reasonable opportunity to be heard

75F FMA may give QFE direction

75G Other provisions concerning FMA's powers in relation to QFE default

QFE’s obligations

76 Ongoing obligations of QFEs and of partner entities

77 QFE must provide annual report to FMA

Part 3A
Brokers' disclosure and conduct obligations

Who is broker and what is broking service

77A Who is broker

77B What is broking service

77C Other exemptions

Disclosure obligations for services for retail clients

77D What is disclosure obligation and when does it apply

77E Broker must make disclosure before receiving client money or client property from retail client

77F What broker must disclose and form of disclosure

77G Disclosure must not be misleading, deceptive, or confusing

77H Disclosure of additional information

77I No compliance with disclosure obligation if disclosure out of date

Brokers' conduct obligations

77J What is conduct obligation and when does it apply

77K Broker must exercise care, diligence, and skill

77L Broker must not engage in misleading or deceptive conduct

77M Advertisement of broking services must not be misleading, deceptive, or confusing

77N Restriction on use of term sharebroker [Repealed]

77O Broker must not receive client money if offer for subscription illegal

Obligations for handling client money and client property

77P Broker must pay client money into separate trust account and hold client property on trust

77Q Broker must account for client money and client property

77R Broker must keep records of client money and client property

77RA Broker must report on client money and client property

77S Restrictions on use of client money and client property

77T Protection of client money and client property held on trust

Persons acting in course of business of employers or principals

77U Who is responsible for broker obligations

FMA's direction in respect of breach of disclosure or conduct obligation

77V FMA may give broker direction in respect of breach of disclosure or conduct obligation

Part 4
How financial advisers and brokers are regulated

78 Outline of this Part

Subpart 1Code of professional conduct and code committee

Commissioner for Financial Advisers

[Repealed]

79 Commissioner for Financial Advisers [Repealed]

80 Functions of Commissioner [Repealed]

Code committee

81 Establishment of code committee

82 Functions of code committee

83 Membership of code committee

84 Proceedings of code committee

85 Certain provisions of Crown Entities Act 2004 apply to members of code committee

85A Funding of code committee

Code of professional conduct for authorised financial advisers

86 Content of code

87 Code committee must prepare code

88 FMA's approval of draft code

89 FMA may require revision or consultation

90 FMA's approval of revised draft code

91 Deadline for FMA's approval of draft code

92 Minister’s approval required

93 Deadline for Minister's approval of draft code

94 Code comes into force by Gazette notice

Changes to code

95 Changes to code

Subpart 2Complaints and disciplinary proceedings

Who deals with complaints

96 Complaint about financial adviser

97 Investigation by FMA

Complaint about authorised financial adviser

98 Reference of complaint to disciplinary committee

99 Disciplinary committee must give notice of complaint to financial adviser concerned

100 Content of disciplinary committee's notice of complaint

101 Disciplinary committee may discipline authorised financial adviser for breach of code

102 Reasonable opportunity to be heard

Disciplinary committee

103 Minister must establish disciplinary committee

104 Functions of disciplinary committee

105 Membership of disciplinary committee

106 Proceedings of disciplinary committee

107 Disciplinary committee may hear evidence in disciplinary proceeding

108 District Court may authorise disciplinary committee to summon witnesses on disciplinary matters

109 Issuing of summons by disciplinary committee

110 Serving of summons

111 Witnesses' fees, allowances, and expenses

112 Protection for witnesses and counsel in disciplinary proceeding

113 Certain provisions of Crown Entities Act 2004 apply to members of disciplinary committee

113A Funding of disciplinary committee

Subpart 3Offences

Offences: Restrictions on providing services and holding out

114 Offence of providing financial adviser service without being permitted to do so

115 Offence of holding out as authorised financial adviser, financial planner, investment planner, or QFE

116 Offences in relation to employer or principal failing to maintain registration [Repealed]

Disclosure offences: Financial advisers, QFEs, and brokers

117 Failure to make disclosure under or in accordance with disclosure obligation

Conduct offences: Financial advisers and brokers

118 Offence of misleading or deceptive conduct by financial adviser or broker

119 Offence of misleading, deceptive, or confusing advertisement by financial adviser or broker

120 Offence of contravening restrictions on use of term sharebroker [Repealed]

Offences: Authorised financial advisers only

121 Offence of recommending offer of securities when subscription illegal

122 Offence of contravening requirement that authorised financial adviser pay client’s money into separate trust account [Repealed]

123 Offence of failing to account for client’s money or other property [Repealed]

124 Offence in relation to records of client’s money or property [Repealed]

125 Offence of breaching restrictions on use of client’s money or property [Repealed]

126 Offence of failing to comply with terms and conditions of authorisation

127 Offence of failing to comply with FMA's direction

128 Offence of contravening condition of disciplinary committee’s order

Offences: QFEs and QFE groups only

129 Offence of failing to comply with terms and conditions of QFE status

130 Offence of misleading or deceptive conduct in relation to financial adviser service by employee, agent, or nominated representative

131 Offence of misleading, etc, advertisement of financial adviser service by employee, agent, or nominated representative

132 Offence of failing to comply with FMA's direction

133 Offence of failing to comply with obligations in relation to authorised financial advisers

134 Offence of failing to provide annual report

134A Defence to offences relating to entities in QFE groups

Offences: Broking services only

134B Offence of receiving client money if offer for subscription illegal

134C Offence of contravening requirement to pay client money into separate trust account and hold client property on trust

134D Offence of failing to account for client money and client property

134E Offence in relation to records of client money and client property

134EA Offence of failing to report on client money and client property

134F Offence of breaching restrictions on use of client money and client property

134G Offence of failing to comply with FMA's direction

135 Offence of failing to comply with FMA's direction in respect of breach of disclosure or conduct obligation

Miscellaneous offences

[Repealed]

136 Offence of false declaration, etc, in support of application for authorisation or grant of QFE status

137 Failure to comply with summons to attend disciplinary committee hearing

Subpart 4Injunctions, banning orders, and other remedies

Injunctions

137A Injunctions against contraventions

137B Undertaking as to damages not required by FMA

137C When court may make banning order

137D Terms of banning orders

137E Offence of contravening banning order

Orders to preserve assets to satisfy claims

137F When High Court may prohibit payment or transfer of money, securities, or other property

137G What orders may be made

137H Interim orders

137I Relationship with other law

137J Offence of breaching orders

Pecuniary and compensatory orders for contravening wholesale certification requirement

137K Pecuniary order for contravening wholesale certification requirement

137L Compensation for contravention of wholesale certification requirement

Temporary banning orders against financial adviser and broker

137M When FMA may make temporary banning orders for financial adviser services or broking services

137N Terms of temporary banning order

Process for FMA's orders

137O FMA must follow steps before making orders

137P FMA may shorten steps for specified orders

137Q FMA must give notice after making orders

137R General provisions on temporary banning orders

137S Offence of failing to comply with FMA's orders

Part 5
General provisions

Appeal of decisions

138 Right of appeal

139 Notice of right of appeal

140 Decision to have effect pending determination of appeal

141 Procedure on appeal

142 Court's decision final

143 Court may refer matter back for reconsideration

144 Orders as to costs

145 Orders as to publication of names

146 Appeal on question of law

Securities Commission: General powers

[Repealed]

147 Commission may exercise powers under Securities Act 1978 [Repealed]

Standard conditions for incorporation in authorisation and grants

147A Approval of standard conditions for incorporation in authorisations and grants of QFE status

147B Requirement to consult on proposal to incorporate material by reference

147C Variation or revocation of standard conditions

147D When standard conditions come into force

147E Incorporation of changed standard conditions into existing authorisations or grants

Exemptions

148 FMA may grant exemptions

148A FMA may vary or revoke exemption

148B Status of exemptions, variations, or revocations

149 FMA must notify reasons for exemption other than class exemption

150 Commission may vary or revoke exemption [Repealed]

Information sharing

151 Information sharing

Fees

152 FMA's fees, charges, and costs

153 Levy [Repealed]

Regulations

154 General regulations

155 Regulations relating to fees, charges, and costs

Other matters

156 No contracting out

157 Territorial scope

158 Breach of exemption conditions

159 Exemption or regulation in respect of specified overseas jurisdictions [Repealed]

160 Time for filing charging document

161 Ministry must review and report on operation of Act

Other legislation affected

161A Financial Service Providers (Registration and Dispute Resolution) Act 2008 amended [Repealed]

162 KiwiSaver Act 2006 amended

163 Securities Act 1978 amended

164 Securities Markets Act 1988 amended

165 Sharebrokers Act 1908 repealed

166 Securities Markets (Investment Advisers and Brokers) Regulations 2007 revoked

Transitional provisions

167 Transitional provisions for existing offences and contravention under Securities Markets Act 1988

168 Grant of authorisations in transitional period without prior inquiry into convictions

Financial Advisers Amendment Act 2011

Reprint notes