1 Title

1 Title

2 Commencement

2 Commencement

3 Purpose of Act

4 Overview of Act

5 Interpretation

6 Meaning of advice, financial advice, and financial decision

7 Meaning of financial adviser

8 Act does not apply to lawyer who performs financial adviser service in course of professional practice

9 Act binds the Crown

10 Prerequisites for performing financial adviser service for member of public

11 Financial adviser service performed by non-individual financial adviser deemed to be performed by individual as well in certain cases

12 Financial adviser’s disclosure obligation

13 Financial adviser must disclose experience, qualifications, professional standing, etc

14 Financial adviser must disclose certain criminal convictions, etc

15 Financial adviser must disclose fees

16 Financial adviser must disclose other interests and relationships

17 Financial adviser must disclose details of financial products about which advice given

18 Financial adviser must disclose procedures for handling client’s money or other property

19 Disclosure in relation to indemnity insurance

20 How disclosure must be made

21 Disclosure must not be misleading

22 Disclosure of additional information

23 No compliance with disclosure obligations if disclosure statement out of date

24 Advertisement must refer to disclosure statement

25 Financial adviser must act with integrity

26 Financial adviser must exercise care, diligence, and skill

27 Financial adviser must not engage in misleading or deceptive conduct

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

29 Financial adviser must not recommend or receive money for acquisition of securities if offer for subscription illegal

30 Financial adviser must pay client’s money into separate trust account

31 Financial adviser holds client’s property on trust

32 Restrictions on use of client’s money or property

33 Financial adviser must account for client’s money or property

34 Financial adviser must keep records of client’s money and other property

35 Protection of client’s money held on trust

36 What is approved professional body

37 Application for approval

38 Pre-application consultation with Commission

39 Minister must refer application to Commission

40 Notification and publication of application

41 Recommendation by Commission

42 Criteria for recommendation

43 Minister must decide application

44 Notification and publication of decision

45 Re-application by unsuccessful applicant

46 Withdrawal of approval

47 Publication of withdrawal of approval

48 Effect of withdrawal of approval on members of professional body

49 Disqualified person must not be member of approved professional body

50 List of members

51 Approved professional body must notify Registrar of Financial Service Providers of change in membership

52 Minister may consult in exercise of powers under Act

53 Content of rules

54 Characteristics of rules

55 Rules must be publicly available

56 Commission approval required for rule change initiated by approved professional body

57 Approved professional body may apply to Minister for approval of rule change

58 Rule change proposed by Commission

59 Approved professional body may object to rule change proposed by Commission

60 Minister must decide whether to approve or refuse rule change if approved professional body objects

61 Approved professional body must notify Commission of investigation into member misconduct

62 Commission may direct approved professional body to adhere to rules

63 Approved professional body must make annual report to Commission

64 Approved professional body must give Commission other information and assistance on request

65 Approved professional body’s power to disclose further information to Commission

66 Protection from liability

67 When Commission may make prohibition and corrective orders

68 Terms of prohibition and corrective orders

69 When Commission may make disclosure order

70 Terms of disclosure order

71 When Commission may make temporary banning orders for financial adviser activities

72 Terms of temporary banning order for financial adviser services

73 Commission must follow steps before making orders

74 Commission may shorten steps for specified orders

75 Commission must give notice after making orders

76 General provisions on Commission’s orders

77 What Court may injunct

78 When Court may grant injunctions and interim injunctions

79 Undertaking as to damages not required by Commission

80 When Court may grant corrective order

81 Terms of corrective order

82 When Court may make disclosure order

83 Terms of disclosure order

84 Overview of civil remedies

85 When Court may make pecuniary penalty order and declaration of contravention

86 Purpose and effect of declaration of contravention

87 What declaration of contravention must state

88 Maximum amount of pecuniary penalty

89 Considerations for Court in determining pecuniary penalty

90 Court must order that recovery from pecuniary penalty be applied to Commission’s actual costs

91 When Court may make compensatory orders

92 Terms of compensatory orders

93 When Court may make civil remedy order for contravention of financial advisers’ obligation

94 Terms of civil remedy order for contravention of financial advisers’ obligation

95 More than 1 civil remedy order may be made for same conduct

96 Only 1 pecuniary penalty order may be made for same conduct

97 Standard of proof for civil remedies

98 Time limit for applying for civil remedies

99 When Court may make banning orders for financial adviser activities

100 Terms of financial adviser banning order

101 Persons automatically banned from financial adviser activities

102 General provisions for bans and banning orders

103 When Court may prohibit payment or transfer of money, securities, or other property

104 What orders may be made

105 Interim orders

106 Relationship with other law

107 Offence of performing financial adviser service for member of public without being member of approved professional body and registered

108 Offence if false representation as to membership of approved professional body or registration

109 Offence for failure to comply with financial advisers’ disclosure obligation

110 Offence of deceptive, misleading, or confusing disclosure

111 Offence of deceptive, misleading, or confusing advertisement

112 Offence of recommending or receiving money in connection with offer of securities when subscription illegal

113 Offence of contravening requirement that financial adviser hold client’s money in separate trust account

114 Offence of breaching restrictions on use of client’s money or property

115 Offence of failing to account for client’s money or property

116 Offence in relation to records of client’s money or property

117 Offence of failing to comply with Commission’s orders

118 Offence of contravening financial adviser banning order

119 Offence of contravening section 101 (automatic banning)

120 Offence of contravening Court order under section 104 or 105

121 Time for laying information for summary offences

122 Evidence not otherwise admissible

123 Court may order payment of Commission’s costs

124 Orders to secure compliance

125 Giving notice of applications for Court orders

126 General provisions as to Court’s orders

127 Persons entitled to appear before Court

128 Knowledge of matters presumed if employee or agent knows matters

129 No pecuniary penalty and fine for same conduct

130 Regulations

131 Breach of exemption conditions

132 Regulations or exemptions in respect of specified overseas jurisdictions

133 No contracting out

134 Territorial scope

135 No liability under Fair Trading Act 1986 if not liable under this Act

136 Commission may grant exemptions

137 Commission must notify reasons for exemption

138 Commission may vary or revoke exemption

139 Commission may exercise powers under Securities Act 1978

140 Amendments to Securities Act 1978

141 Amendments to the Securities Markets Act 1988

142 Transitional provision for existing offences and contravention under Securities Markets Act 1988

3 Purpose of Act

4 Overview of Act

5 Interpretation

6 Act binds the Crown

7 Outline of this Part

8 Who is financial adviser

9 Types of financial adviser

10 What is financial adviser service

11 When person gives financial advice

12 When advice or transaction by certain persons is not performing financial adviser service

13 Meaning of financial advice clarified

14 Who may perform financial adviser service

15 Individual who is authorised financial adviser

16 Individual who is registered

17 Individual who is QFE employee or agent

18 Employer or principal of financial adviser must be registered

19 Client’s rights preserved against employer or principal of financial adviser

20 What is disclosure obligation

21 Financial adviser must make disclosure before performing financial adviser service

22 Disclosure by authorised financial adviser

23 How disclosure must be made by authorised financial adviser

24 Disclosure by financial adviser performing financial adviser service in relation to category 2 product

25 Disclosure by qualifying financial entity

26 Disclosure must not be misleading, deceptive, or confusing

27 Disclosure of additional information

28 No compliance with disclosure obligations if disclosure out of date

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

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

31 What is conduct obligation

32 Financial adviser must exercise care, diligence, and skill

33 Financial adviser must not engage in misleading or deceptive conduct

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

35 Authorised financial adviser must comply with code

36 Authorised financial adviser must not recommend or receive money for acquisition of securities if offer for subscription illegal

37 Authorised financial adviser must pay client’s money into separate trust account

38 Authorised financial adviser must account for client’s money or property

39 Authorised financial adviser must keep records of client’s money and other property

40 Restrictions on use of client’s money or property

41 Protection of client’s money or property held on trust

42 Meaning of received or held

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

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

45 QFE must not engage in misleading or deceptive conduct in relation to financial adviser service by employee or agent

46 Advertisement by QFE of financial adviser service must not be misleading, deceptive, or confusing

47 Outline of this Part

48 Who is authorised financial adviser

49 Who may apply to be authorised

50 Application to be authorised

51 Eligibility to be authorised

52 Commission must approve or decline application for authorisation

53 Commission must notify Registrar of authorisation

54 Termination of authorisation

55 Renewal of authorisation

56 Commission’s powers in relation to default by authorised financial adviser

57 Reasonable opportunity to be heard

58 Commission may give authorised financial adviser direction

59 Other provisions concerning Commission’s powers in relation to default by authorised financial adviser

60 What is qualifying financial entity (QFE)

61 Who may apply for QFE status

62 Application for QFE status

63 Eligibility for QFE status

64 Commission must approve or decline application for QFE status

65 Commission must notify Registrar of grant of QFE status

66 Termination of QFE status

67 Renewal of QFE status

68 Commission’s powers in relation to QFE default

69 Reasonable opportunity to be heard

70 Commission may give QFE direction

71 Other provisions concerning Commission’s powers in relation to QFE default

72 Exemption from liability for employee or agent of QFE

73 QFE’s ongoing compliance obligations

74 QFE must provide annual report to Commission

75 Outline of this Part

76 Commissioner for Financial Advisers

77 Functions of Commissioner

78 Commissioner must establish code committee

79 Functions of code committee

80 Membership of code committee

81 Proceedings of code committee

82 Content of code

83 Code committee must prepare code

84 Commissioner’s approval of draft code

85 Commissioner may require revision or consultation

86 Commissioner’s approval of revised draft code

87 Deadline for Commissioner’s approval of draft code

88 Minister’s approval required

89 Deadline for Minister's approval of draft code

90 Code comes into force by Gazette notice

91 Changes to code

92 Complaint about financial adviser

93 Investigation by Commission

94 Complaint about authorised financial adviser

95 Commission must give notice of complaint to financial adviser concerned

96 Content of Commission’s notice of complaint

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

98 Reasonable opportunity to be heard

99 Minister must establish disciplinary committee

100 Functions of disciplinary committee

101 Membership of disciplinary committee

102 Proceedings of disciplinary committee

103 Disciplinary committee may hear evidence in disciplinary proceeding

104 District Court may authorise Commissioner to summon witnesses on disciplinary matters

105 Issuing of summons by Commissioner

106 Serving of summons

107 Witnesses' fees, allowances, and expenses

108 Protection for members of disciplinary committee and others in disciplinary proceeding

109 Offence of performing financial adviser service without being registered

110 Offence of performing financial adviser service in relation to category 1 product without being authorised

111 Offences in relation to employer or principal failing to maintain registration

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

113 Offence of misleading or deceptive conduct by financial adviser

114 Offence of misleading, deceptive, or confusing advertisement by financial adviser

115 Offence of recommending or receiving money in connection with offer of securities when subscription illegal

116 Offence of contravening requirement that authorised financial adviser pay client’s money into separate trust account

117 Offence of failing to account for client’s money or other property

118 Offence in relation to records of client’s money or property

119 Offence of breaching restrictions on use of client’s money or property

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

121 Offence of failing to comply with Commission’s direction

122 Offence of contravening condition of disciplinary committee’s order

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

124 Offence of misleading or deceptive conduct in relation to financial adviser service by employee or agent

125 Offence of misleading, etc, advertisement of financial adviser service by employee or agent

126 Offence of failing to comply with Commission’s direction

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

128 Offence of failing to provide annual report

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

130 Failure to comply with summons by Commissioner to attend disciplinary committee hearing

131 Right of appeal

132 Notice of right of appeal

133 Decision to have effect pending determination of appeal

134 Procedure on appeal

135 Court's decision final

136 Court may refer matter back for reconsideration

137 Orders as to costs

138 Orders as to publication of names

139 Appeal on question of law

140 Commission may exercise powers under Securities Act 1978

141 Commission may grant exemptions

142 Commission must notify reasons for exemption

143 Commission may vary or revoke exemption

144 Information sharing

145 Commission's fees, charges, and costs

146 Operational levy

147 General regulations

148 Regulations relating to fees, charges, and costs

149 No contracting out

150 Territorial scope

151 Breach of exemption conditions

152 Exemption or regulation in respect of specified overseas jurisdictions

153 Time for laying information for summary offences

154 Ministry must review and report on operation of Act

155 KiwiSaver Act 2006 amended

156 Securities Act 1978 amended

157 Securities Markets Act 1988 amended

158 Sharebrokers Act 1908 repealed

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

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