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A law change allowing tougher rules for financial advisers has passed through Parliament but industry leaders say it will take at least a year before the details are worked through and longer before the rules can be introduced.
The Financial Advisers Bill was rushed through under urgency yesterday, passing its second and third readings within hours.
Unlike most bills, it received strong political support across the parties, passing 118 votes to two. Act was the only party to vote against it.
The bill allows for the adoption of a two-tiered approach to the authorisation of financial advisers. The first tier will require those who provide advice on complex products such as securities and investments such as KiwiSaver to become approved as authorised financial advisers.
The second tier will take in those who give advice on basic products such as savings accounts, credit cards and insurance. Second tier advisers will have to comply only with basic conduct and disclosure requirements, be registered and belong to a dispute resolution scheme.
The first tier of adviser will have to be authorised directly by the Securities Commission while the second tier, likely to be mainly bank staff, will be monitored through their company becoming a qualifying financial entity.
A Commissioner of Financial Advisers is to be appointed to oversee a code committee which will lay out the minimum requirements for an adviser to become authorised as well as a dispute resolution committee.
Commerce Minister Lianne Dalziel said the passing of the bill was an important step in helping to shore up investor confidence.
But Society of Independent Financial Advisers chairman Murray Weatherston estimated there were between 5000 and 10,000 people who would need to receive authorisation to advise on category one products and said it was likely to be years before the system could be implemented.
