Parliament's Economic Development, Science and Innovation Committee has released its final report on the Financial Services Legislation Amendment Bill, with a recommendation that the bill be passed with amendments.

The bill seeks to establish a new regulatory regime for financial advice and financial advisers in New Zealand, and to amend requirements for registration on the Financial Service Providers Register (the FSPR) to prevent its misuse. The bill is based upon a statutory review of the existing regulatory regime completed in 2016.

The key amendments proposed in the bill include:

• Removing the requirement that only a natural person can give financial advice, to allow for the provision of online advice (“robo-advice”).

• Expanding the minimum standards of competence, knowledge, and skill to all categories of people giving financial advice to retail clients.

• Requiring all people who give regulated financial advice to comply with standards of ethical behaviour, conduct, and client care.

• Adding a requirement that anyone who gives financial advice must put the interests of the client first and disclose prescribed information.

• Limiting who can give regulated financial advice.

• Simplifying the regime and its terminology, for example by removing the categories of Authorised Financial Advisers, Registered Financial Advisers and Qualifying Financial Entities.

• Amending the requirements to be registered on the New Zealand FSPR to prevent its misuse.

• The committee has proposed amendments to clarify the policy intent of the bill, to ensure that the regulatory regime can be applied in a practical and effective way.

Advice given by lawyers and other occupations

It says it agrees with the exclusion of financial advice if given in the ordinary course of business or carrying on an occupation by a lawyer, conveyancer, accountant, journalist, real estate agent, valuer, or other excluded occupation.

"We recognise that normal legal and accounting advice may sometimes technically fall under the bill’s definition of financial advice. However we consider that lawyers and accountants should not be burdened with additional regulatory controls in the course of their ordinary business or occupation. Existing regulatory frameworks for the legal and accounting professions should suffice. We therefore consider the exclusion necessary to avoid unnecessary compliance requirements.

"However, we consider that this exclusion should be limited. We consider that the status quo, where lawyers and accountants are not covered by the scheme if they provide financial advice within the scope of their ordinary business or occupation, is acceptable (subject to the clarification in the following paragraph).

"We note that some individuals have written guides to managing money in newspaper columns and in online blogs. We consider that the scope of this advice is generally narrow enough that it should not be covered by the regulatory regime. Nonetheless, to avoid uncertainty and clarify the narrow scope of the exclusions, we recommend amending clause 8 in new Schedule 5 (inserted by Schedule 2 of the bill). The key amendment is a new requirement that giving the advice is an ancillary part of carrying on the relevant occupation."