From 1 July 2011 Financial Advisers must be individually authorised by the Financial Markets Authority (FMA) to give personalised investment advice to retail clients under the new regulatory regime. The regime is being established to regulate financial advisers and lift professional standards across New Zealand's financial services industry, to build public confidence and encourage participation in capital markets.
The AFA credentials are the passport to practise as a financial adviser in the new regulatory regime established under the Financial Advisers Act.
From 1 July before you accept financial advice ask: "Are you an AFA?"
The Financial Advisers Act (2008) comes into force fully on 1 July 2011. It introduces minimum standards of professionalism for financial advisers and gives the FMA (which supercedes the Securities Commission) the power to regulate people who give financial advice. This new law states who needs to be individually authorised and registered to practise in the new regulatory regime.
The Act also contains prohibitions to prevent people from calling themselves an AFA, a financial planner or an investment planner unless they are authorised to provide these services.
What does it mean to be an Authorised Financial Adviser?
An Authorised Financial Adviser must:
- Meet obligations under the Act including the requirements to act with care, diligence and skill and not to mislead clients, and to make disclosures to retail clients when carrying out personalised services.
- Comply with a Code of Professional Conduct that prescribes minimum standards for competence, knowledge and skills, client care, ethical behaviour and requirements for continuing professional training.
- Comply with the terms and conditions of authorisation, including Standard Conditions and any individual conditions.
The Financial Advisers Act means Advisers are accountable for the advice they give and how they give it.
The Act is all about lifting standards across the industry to build public confidence in the professionalism and integrity of financial advisers. Regulation can't eliminate risk and consumers will still be responsible for the investment choices they make. However, people need to be confident that financial advisers are qualified to deliver the services they offer.
When the new regime is in place, before you accept financial advice ask: "Are you an AFA?"
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