Monday 3rd May 2010 |
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Commerce Minister Simon Power has released a series of decisions to soften the application of the Financial Advisers Act 2008 where it involves institutional investors, large companies, and "highly sophisticated individuals."
The banking, legal, accounting and corporate communities had been lobbying strenuously for the amendments, which will be bundled into a Supplementary Order Paper for the fix-up bill already before Parliament to deal with a host of other problems with the Act, which was started by Labour and carried through by National.
While its intention to protect retail investors is unimpeachable, a slew of practical difficulties has blighted the Act since its passage, leading to the Financial Services Providers (Pre-Implementation Adjustments) Bill.
The commerce select committee has set aside all of Thursday until late evening to hear additional submissions on the Bill created by more general changes Power announced last week, and tonight's detailed changes to assuage fears in the investment community that the new law could create barriers to national and international commercial dealings.
The proposed regime will now base eligibility for exclusion from the rules to protect retail investors on whether clients have sufficient negotiating power to ensure they receive appropriate advice, or are sophisticated in financial matters.
The rules will apply: to institutional investors; large entities with gross assets of more than $10 million, annual turnover of $20 million, or more than 50 staff; investors receiving advice on investments worth more than $500,000; and "eligible" sophisticated investors.
Other changes announced this afternoon are:
· Allowing institutions operating as groups of related companies to use the qualifying financial entity mechanism efficiently;
· Allow companies to issue generic advice such as brochures in their own, rather than an individual's, name;
· Increase the powers of the Securities Commission to grant limited exemptions from the regime;
· Increase the government's ability to give total exemptions from the regime by regulation.
Businesswire.co.nz
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