New Zealand financial planners may soon be free to practice in Australia if the recommendations of draft adviser regulations across the Tasman are adopted.

New Zealand financial planners may soon be free to practice in Australia if the recommendations of draft adviser regulations across the Tasman are adopted. Last week the New Zealand government released its long-awaited ‘Financial intermediaries discussion document’, which mooted the idea of a “mutual recognition regime” between the neighbouring countries. “If a regime is developed which achieves equivalent outcomes (but not with necessarily identical regulation) to the Australian regime then options like mutual recognition could be explored which would enable intermediaries to operate in both countries at low cost,” the New Zealand Ministry of Economic Development (MED) says in the discussion document. The suggestion was included amongst a raft of wide-ranging proposals to impose new rules on New Zealand’s financial intermediary market – which is essentially unregulated. In 2004 the International Monetary Fund (IMF) Financial Sector Assessment Program rated New Zealand’s regulation of the financial advice market as well below global best practice. The draft regulations, which are open to submissions until September 1, largely follow the line of last year’s report from the Financial Intermediary Taskforce that laid the basis for a ‘co-regulatory’ model in New Zealand. Under the MED proposals financial advisers would have to belong to an ‘Approved Professional Body’ (APB) designed to oversee the new standards. The APB system would in turn be regulated by the Securities Commission (New Zealand’s version of ASIC). The New Zealand proposals would also cast a wider net than in Australia with real estate agents and others giving advice on property investments also expected to be caught under the new regulations. However, the MED has also mapped out a three-tiered model for regulation of financial intermediaries based on their level of client interaction and product knowledge. The three levels of intermediary have been classified as: information only; product marketers, and; high-level financial advice. While the proposed regulations are significantly different than the Australian regime the MED says in the discussion document that the ‘Memorandum of Understanding on Business Law’ and the ‘Trans-Tasman Mutual Recognition Arrangement’ (TTMRA) signed between the two governments mean mutual recognition is likely. “Ministry officials have paid careful consideration to the Australian regime to ensure that equivalent objectives and outcomes to the Australian regime are obtained so that there is the potential to utilise (at least for some intermediaries) the TTMRA. “This does not mean that we will be adopting Australian regime, rather this would enable intermediaries to operate in both jurisdictions, remove impediments to cross border activity and move us further towards a single economic market.” When regulation of financial advisers was first proposed the New Zealand industry almost unanimously opposed the introduction of a regime similar to Australia. Following the consultation process the adviser regulations are expected to pass into law in the middle of 2007.

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