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Financial Markets Authority issues guidance note on sales and distribution of KiwiSaver

Financial Markets Authority issues guidance note on sales and distribution of KiwiSaver

The Financial Markets Authority (FMA) has clarified the rules around the sale and distribution of KiwiSaver schemes in an attempt to remove ambiguity around how information is provided to the investing public and by whom.

The 28-page guidance note, issued Monday, explains how registered advisors are limited to explaining the nuts and bolts of the retirement saving scheme relating only to a particular provider's product range while authorised financial advisors (AFAs) and qualified financial entities (QFEs) are entitled to give personalised advice explaining how the saving vehicle could fit within a larger financial plan.

Sue Brown, head of primary regulatory operations for the FMA, said the guidance note also details what factors the FMA will take into account when determining whether a product was sold in an appropriate manner.

Brown said the note was issued in response to outstanding concerns raised by members of the industry.

“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.''

As such, Brown said it was important to outline how the various professions were able to handle sales and advice around KiwiSaver.

The note provides several scenarios and explains how the FMA would assess whether class advice or personalised advice was provided.

"Promoting high standards in the sale of KiwiSaver, while taking into account the need for investors to have access to advice, will not only encourage New Zealanders to invest in KiwiSaver, but will also encourage the public’s confidence in the professionalism of financial advisers (a key objective of the Act) and in the capital markets more generally,'' said the Authority.

Brown said KiwiSaver scheme distributors would be expected to review the guidance note and put into place any relevant operational changes by March 2013.

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1 Comments

Banking industry up in arms over this guidance note - no surprises - will reduce their ability to flog their own KiwiSaver products via unqualified sales people who are generally remunerated on sales numbers and service.
Will be interesting to see the bank submissions and whether FMA caves in to their demands.
 

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