The New Zealand Herald

Minister wants simpler rules on disclosure

- — BusinessDe­sk

Commerce and Consumer Affairs Minister Kris Faafoi wants more easily-understood financial adviser disclosure rules to make sure customers aren’t led astray, and is seeking submission­s on regulation­s accompanyi­ng the upcoming law change.

The Ministry of Business, Innovation and Employment discussion document came out the same day that Financial Markets Authority-commission­ed research showed investors have found product disclosure statements more useful than the previous regime in offering valuable insights in investment offers.

Legislator­s are currently considerin­g a bill to remove some of the confusion for consumers in the way financial advisers are designated, and putting client obligation­s on the industry. While that works its way through Parliament, MBIE is seeking feedback on proposed regulation­s that will set the disclosure requiremen­ts for advisers to make sure consumers get all the informatio­n they need at the right time.

“Consumers should have that informatio­n to assist them to decide, for example, whether to obtain advice from a particular provider,” Faafoi said. “I want to make sure that important informatio­n is presented in simple terms that consumers understand.”

The proposed disclosure regime can draw on the experience of changes to securities law, which pared back the size of investment prospectus­es to the more manageable product disclosure statement under the five-year-old Financial Markets Conduct Act.

FMA-commission­ed research found the product disclosure statement was the first thing investors looked at to get a sense of a product, using it as a primary informatio­n source for decision making. Interviewe­es told researcher­s PDS was an improvemen­t on the investment statement-prospectus disclosure regime, but were “long and repetitive”, using “academic” language and “a lot of legal terminolog­y”.

“Some mainly offshore-controlled entities have been ‘ free-riding’ off New Zealand’s reputation for sound financial markets regulation by using their registrati­on to imply that they are actively regulated in New Zealand when that is not the case,” Faafoi said.

“I want feedback on the proposals that aim to address this unscrupulo­us behaviour.”

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