Govt softens conduct requirements for advisers

The Government has proposed winding back some tough controls it wanted to impose on financial advisers including mortgage advisers.

It earlier wanted intensive supervision and even training of advisers to be done by financial institutions such as banks and non-bank lenders.

This would have been required by the Financial Markets (Conduct of Institutions) Bill, or COFI, which has passed its second reading in Parliament.

This law has been widely criticised as legislative overkill from within the financial sector, and a needless replication of the FAP programme.

But a Supplementary Order Paper (SOP)  proposes a pullback from some of the COFI proposals.

One key element concerns supervision and training of intermediaries, which will be removed in some cases.

“In particular, certain requirements now apply only in relation to employees (rather than intermediaries and agents as well),” the SOP said.

“In addition, the requirement for certain persons to follow procedures or processes to support the financial institution’s compliance with the fair conduct principle ….. no longer applies in relation to intermediaries (but continues to apply to agents and employees).”

These moves are likely to be seen in the industry as restoring clarity over the difference between employees and contractors.

The SOP is long and is still being studied by many in the industry. It does not yet have the status of law but will be incorporated into upcoming debate on the bill.

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