Forsyth Barr managing director Neil Paviour-Smith told the Otago Daily Times from Wellington that the disclosure rules were helpful in giving the public more confidence when dealing with advisers.
‘‘We, as brokers, have been arguing for a long time for a level playing field for the wider investment community. This is one step in the right direction.
‘‘There are aspects of the new regime we feel are a little bit redundant and a waste of time. They could be fine-tuned with the next review by the Ministry of Economic Development and Securities Commission,'' he said.
The areas that concerned Mr Paviour-Smith were releasing research reports, which usually had a buy, sell, hold or accumulate recommendation attached, and what comments brokers could make to the media.
Also, there could be problems if an investor telephoned for advice and found his or her regular adviser was away and they did not have the disclosure document of the replacement adviser.
Those issues were expected to be resolved this week, but they would be monitored.
Commerce Minister Lianne Dalziel said the investment industry would be subject to more stringent rules.
Anyone who gave investment advice to clients would have to provide more information, especially about how they were being paid to recommend particular investments. Disclosure was mandatory and must be made without the client having to ask for it.
The disclosure documents must include the experience and qualifications of the adviser along with their criminal convictions, the nature and level of fees charged, other interests and relationships (including all remuneration) and types of securities that the adviser advised on.
Mr Paviour-Smith said it was easy to be critical of something new that involved more bureaucracy and red tape.
‘‘But if it means the ‘bad advisers' are weeded out through this disclosure regime, that's good. We are not concerned by disclosure. We have set up our process in advance to comply with the new regime and expect organisations like us to do the same.''
However, you could never regulate for bad behaviour and if someone was intent on breaking the law, they would, he said.
There would also be increased costs for complying with the new regime and they would be passed on to the public, he said.
Peter Smith Financial Services principal Peter Smith had been providing disclosure documents to clients for the past eight years and had no problems with the new regime.
He was today posting his disclosure document to all clients, along with a newsletter explaining the changes. Asked about presenting advice at investment seminars, Mr Smith said he would provide a disclosure document to those attending at the start of his presentation.
‘‘You don't have to prove the person has read it. I don't see it as a problem.''
Mr Smith also believed he could comment to the media about investments as long as the media outlet had his disclosure document, something he provided to the ODT yesterday.
Myles Wealth Management director Craig Myles said the new law was designed to encourage interaction between the adviser and the individual client. Those conversations should have high integrity and high quality.
‘‘It encourages that someone doesn't act on advice without having all the information.''
The legislation ‘‘captured'' banks and sharebrokers more than any law had done in the past. Lawyers and accountants who provided financial advice were also included in the new law, he said.
Before, the legislation was so protracted and complex it was difficult to tell who had to comply with what part. There was more onus being put on those people running and advising business but there was more to come, Mr Myles said.
Reviews of other legislation, such as the Financial Advisers Act, meant further changes would be introduced this year. Submissions could be made through Parliament's finance and expenditure select committee.
There were still some gaps in the market place, particularly around companies who did not issue a prospectus.
The lines around when real estate agents were giving financial advice and when they were not were blurred and needed clarification through the regulation review being undertaken this year, he said.
The reviews were the largest overhaul of New Zealand's financial advice and investment industry and were long overdue, Mr Myles said.
