Financial Advisers (Disclosure) Amendment Regulations 2011

2011/51

Coat of Arms of New Zealand

Financial Advisers (Disclosure) Amendment Regulations 2011

Anand Satyanand, Governor-General

Order in Council

At Wellington this 21st day of March 2011

Present:
His Excellency the Governor-General in Council

Pursuant to section 154(1)(a) of the Financial Advisers Act 2008, His Excellency the Governor-General, acting on the advice and with the consent of the Executive Council, and on the recommendation of the Minister of Commerce made after consulting the Securities Commission in accordance with section 154(4) of that Act and being satisfied of the matters specified in section 154(5) of that Act, makes the following regulations.

Regulations

1 Title
  • These regulations are the Financial Advisers (Disclosure) Amendment Regulations 2011.

2 Commencement
  • These regulations come into force on 1 April 2011.

3 Principal regulations amended
4 New regulations 9 and 10 inserted
  • The following regulations are inserted after regulation 8:

    9 Exemptions for personalised service provided over telephone or by video conference in respect of category 2 product
    • (1) A financial adviser is, in respect of a personalised service provided to a retail client over the telephone or by video conference in respect of a category 2 product, exempt from the application of—

      • (a) section 22(1) of the Act (requirement to disclose prescribed information); and

      • (b) section 29 of the Act (requirement to provide new disclosure statement); and

      • (c) regulations 4 to 6, or regulation 7, as the case may be.

      (2) A QFE and a member of a QFE group acting through a QFE adviser is, in respect of a personalised service provided to a retail client over the telephone or by video conference by a QFE adviser in respect of a category 2 product, exempt from the application of—

      • (a) section 25(1) of the Act (requirement to ensure disclosure of prescribed information); and

      • (b) section 29 of the Act (requirement to provide new disclosure statement); and

      • (c) regulation 8.

      (3) Subclauses (1) and (2) are subject to regulation 10.

      (4) To avoid doubt, nothing in this regulation or in regulation 10 prevents an adviser from choosing to comply with section 22(1) or 25(1) of the Act, as the case may be, and these regulations.

    10 Conditions of exemptions in regulation 9
    • (1) The exemptions in regulation 9 are subject to the condition that, before providing the personalised service to the retail client, the adviser, the QFE, or the member of the QFE group (as the case may be) has ensured that the following information has been orally disclosed to that client:

      • (a) that the adviser is a registered financial adviser, an authorised financial adviser, or a QFE adviser, as the case may be; and

      • (b) that the adviser or the adviser's employer or principal belongs to an approved dispute resolution scheme or the reserve scheme, as the case may be; and

      • (c) the name of that scheme; and

      • (d) any other oral disclosure that the Commission requires to be made, in relation to a personalised service provided over the telephone or by video conference in respect of a category 2 product, under terms and conditions imposed under—

        • (i) section 23(2)(n) of the Act (in the case of an authorised financial adviser); or

        • (ii) section 25(2)(d) of the Act (in the case of a QFE); and

      • (e) that the adviser will, if requested by the client, provide the client with full disclosure, in accordance with the Act and these regulations.

      (2) The exemptions in regulation 9 are subject to the condition that if a client requests full disclosure, as provided for in subclause (1)(e),—

      • (a) the adviser must comply with that request (whether the request is made before, during, or at any time after the provision of the personalised service); and

      • (b) the exemptions from the application of section 29 of the Act (in regulation 9(1)(b) and (2)(b)) do not apply.

      (3) For the purposes of this regulation, oral disclosure may be made directly by the adviser, or by way of a pre-recorded message or other electronic means.

Rebecca Kitteridge,
Clerk of the Executive Council.


Explanatory note

This note is not part of the regulations, but is intended to indicate their general effect.

These regulations, which come into force on 1 April 2011, amend the Financial Advisers (Disclosure) Regulations 2010 (the principal regulations).

Regulation 4 inserts new regulations 9 and 10.

New regulation 9 amends the principal regulations to provide exemptions from the written disclosure requirements under the Financial Advisers Act 2008 (the Act) and the principal regulations for financial advisers when providing personalised services over the telephone or by video conference in respect of a category 2 product. These exemptions are subject to the conditions specified in new regulation 10.

New regulation 9(4) provides that, to avoid doubt, nothing in new regulation 9 or 10 prevents an adviser from choosing to provide full disclosure, in accordance with section 22(1) or 25(1) of the Act, as the case may be, and the principal regulations.

The conditions applying to the exemptions in new regulation 9 are set out in new regulation 10. The conditions are that, before the service is provided, oral disclosure must be made to the client, informing the client of the following:

  • that the adviser is a registered financial adviser, an authorised financial adviser, or a QFE adviser, as the case may be; and

  • that the adviser or the adviser's employer or principal belongs to a dispute resolution scheme; and

  • the name of that scheme; and

  • any matters that are required to be orally disclosed in accordance with terms and conditions imposed on the adviser by the Securities Commission; and

  • that the adviser will, if requested by the client, provide the client with full disclosure, in accordance with the Act and the disclosure regulations.

If a client requests full disclosure, the adviser must comply with that request. Full disclosure must be provided whether the request is made before, during, or at any time after the service is provided (new regulation 10(2)).

Oral disclosure may be made directly by the adviser, or by way of a pre-recorded message or other electronic means (new regulation 10(3)).


Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notification in Gazette: 24 March 2011.

These regulations are administered by the Ministry of Economic Development.