Financial Advisers Amendment Act 2010

  • repealed
  • Financial Advisers Amendment Act 2010: repealed, on 15 March 2021, pursuant to section 97(1) of the Financial Services Legislation Amendment Act 2019 (2019 No 8).
9 New sections 5A to 5I inserted

The following sections are inserted after section 5:

5A Who are clients

(1)

For the purposes of this Act, a client

(a)

means a person who receives a service (whether or not on payment of a charge); and

(b)

in relation to a broking service, means the person on whose behalf the financial product is acquired or disposed of or the client money or client property is held (but excludes the product provider); but

(c)

does not include a person who receives any service from another person if the service is both provided and received in the course of, and for the purposes of,—

(i)

the same business; or

(ii)

the businesses of related bodies corporate; or

(iii)

the businesses of members of a QFE group.

Example

If a company employee (A) gives financial advice to the board of directors on investments to be made by the company, the directors are not clients of A. However, if A, in the course of business, gives that same financial advice to another employee (B) in relation to B’s own investments, B would be a client of A for the purposes of this Act.

(2)

Subsection (1) applies whether the person providing or receiving the service is the person carrying on the business, a controlling owner, a director, an agent, or any other person.

5B Who are retail clients

A retail client is a client of a financial adviser or broker who is not a wholesale client.

5C Who are wholesale clients

(1)

The following clients of a financial adviser or broker are wholesale clients in respect of a financial adviser service or a broking service (unless the person has opted out from being a wholesale client under section 5G):

(a)

any other financial adviser or broker who receives the service in the course of business as a financial adviser or broker:

(b)

a person who is in the business of providing any other financial service and receives the financial adviser service or broking service in the course of that business:

(c)

a person whose principal business is the investment of money or who, in the course of and for the purposes of the person’s business, habitually invests money:

(d)

an entity to which at least 1 of the following applied at the end of each of the last 2 completed accounting periods:

(i)

at the balance date, the net assets of the entity exceeded $1 million:

(ii)

the turnover of the entity for the accounting period exceeded $1 million:

(e)

a related body corporate of an entity to which paragraph (d) applies:

(f)

a local authority, a Crown entity, a State enterprise, the Reserve Bank of New Zealand, and the National Provident Fund (and a company appointed under clause 3(1)(b) of Schedule 4 of the National Provident Fund Restructuring Act 1990):

(g)

a person who falls within 1 or more of the categories listed in section 3(2), 5(2CB), or 5(2CBA) of the Securities Act 1978 if the service relates to securities that may be offered to that person, or that have been subscribed for by that person, in a private offer of securities:

(h)

an eligible investor under section 5D.

(2)

If subsection (1) applies to a person (A), it applies equally to any controlling owner, director, employee, agent, or other person acting in the course of, and for the purposes of, A’s business to the same extent as it applies to A.

(3)

In this section, a private offer of securities means an offer of securities that—

(a)

does not constitute an offer of securities to the public under section 3 of the Securities Act 1978; or

(b)

is exempt from Part 2 (other than sections 38B and 58) of that Act under section 5(2CB) or 5(2CBA) of that Act.

5D Who are eligible investors

(1)

A client is an eligible investor if—

(a)

the client certifies in writing that—

(i)

the client has sufficient knowledge, skills, or experience in financial matters to assess the value and risks of financial products and the merits of the service or services to be provided; and

(ii)

the client understands the consequences of certifying himself, herself, or itself to be an eligible investor (including that the competency standards and requirements of the code will not be applicable (if relevant) and that the financial adviser or broker may not be a member of an approved dispute resolution scheme); and

(b)

the client states the reasons for this certification; and

(c)

a financial adviser, a QFE, or a broker signs a written acceptance of the certification in accordance with section 5E.

(2)

A certification may be specific to a particular service or class of services or may be general (but is effective only in relation to services provided after all of the requirements of subsection (1)(a) to (c) are met).

(3)

A certification relating only to a discretionary investment management service or a broking service (or both) does not need to certify as to the matters referred to in subsection (1)(a)(i).

5E Acceptance of certification

(1)

A financial adviser, a QFE, or a broker must not accept a certification unless he, she, or it, having considered the client’s reasons for the certification,—

(a)

is satisfied that the client has been sufficiently advised of the consequences of the certification; and

(b)

has no reason to believe that the certification is incorrect or that further information or investigation is required as to whether or not the certification is correct.

(2)

The person who accepts the certification of a client may be the financial adviser or broker for the client (but does not need to be).

(3)

A financial adviser (other than an authorised financial adviser or QFE) or broker who accepts a certification without having complied with subsection (1) contravenes a wholesale certification requirement.

(4)

Contravention of this section may give rise to a pecuniary penalty order or compensatory order (see sections 137K and 137L).

5F Revocation of certification

(1)

A client who is an eligible investor may revoke a certification, in relation to a financial adviser or broker to whom the certification has been given, by giving the financial adviser or broker a signed notification to that effect.

(2)

A revocation is effective only in relation to services provided after it is given.

5G How to opt out of being wholesale client

(1)

A person may opt out of being a wholesale client, in relation to a financial adviser or broker, by giving the financial adviser or broker a signed notification to that effect.

(2)

A notification may be specific to a particular service, or class of services, or may be general for all services provided by the financial adviser or broker to whom it is given.

(3)

A person may vary or revoke a notification in the same way as the notification may be given.

(4)

A notification (or variation or revocation of a notification) under this section is effective only in relation to services provided after it is given.

(5)

This section does not apply if a person is a wholesale client by reason of being an eligible investor.

5H Giving revocation of certification or notification of opt out

(1)

A revocation of a certification under section 5F or a notification under section 5G is sufficiently given to a financial adviser or broker if—

(a)

provided to the financial adviser or broker; or

(b)

delivered or posted to the financial adviser or broker at the person’s business address stated on the register under the FSP Act or (if not registered) the person’s last known place of business in New Zealand; or

(c)

sent by fax or email to the person’s fax number or email address stated on the register under the FSP Act.

(2)

The revocation or notification is treated as received by the person no later than 7 days after it is posted or 2 days after it is faxed or emailed, unless the person to whom it is posted or sent proves that it was not received (otherwise than through fault on the person’s part).

5I Meaning of acting “on behalf of B’s business” and “acting through A”

(1)

In this Act, a person (A) provides services acting on behalf of the business of another person (B) or on behalf of B’s business if—

(a)

A is a director, an employee, or an agent (including a nominated representative or a contractor) of B and is acting within the scope of his or her actual or apparent authority; or

(b)

A is acting at the direction or with the consent or agreement (whether express or implied) of—

(i)

B; or

(ii)

a director, an employee, or an agent (including a nominated representative or a contractor) of B and the direction, consent, or agreement given is within the scope of the actual or apparent authority of the director, employee, or agent.

(2)

If A is providing services on behalf of B’s business, then B is acting through A to provide those services.