15 October 2012
The Financial Markets Authority has today published its final guidance note for people involved with the sale and distribution of KiwiSaver schemes.
The guidance confirms the factors FMA will take into account when considering whether advice is given, and if so, whether the advice is classified as a 'class' or 'personalised' service.
FMA Head of Primary Regulatory Operations, Sue Brown, said there had been concern in the industry about the extent of service that can be provided by people who are not Authorised Financial Advisers (AFAs) or Qualifying Financial Entity advisers.
"FMA's position is that there are limited circumstances in which a person selling a particular KiwiSaver scheme to a client will not be considered to have provided an advice service," said Ms Brown.
"There is broader scope to provide class advice, given the incentives available to join KiwiSaver and the investment options available within KiwiSaver schemes," she said.
'Class advice' is generic to a group to which the investor belongs, but is not tailored to their particular circumstances. An entity or sole trader providing class advice must be registered for financial adviser services.
'Personalised advice' goes further and takes into account an investor's individual financial situation. Only Authorised Financial Advisers or advisers employed by a Qualifying Financial Entity can give personalised advice about KiwiSaver schemes.
A person giving 'no advice' or 'information only' doesn't need to be registered for financial adviser services, so they may not be covered by a dispute resolution scheme or be accountable for the information provided.
"We expect KiwiSaver scheme distributors to consider the implications of this guidance note and make appropriate changes as soon as possible," Sue Brown said. "We expect these to be in place by 1 March 2013."
The guidance note can be found here.
A copy of the response to submissions can be found here.
Tony Reid on 021 739 052 or firstname.lastname@example.org