431HLiability for duties

1. Sections 431I to 431P (the duty provisions) impose duties on persons who give regulated financial advice to clients.

2. Sections 431Q and 431R impose additional duties on financial advice providers and interposed persons that engage others to give regulated financial advice.

3. If a financial advice provider contravenes a duty provision or section 431Q or 431R, the provider—

4. may be civilly liable for the contravention:
5. is not liable to disciplinary action or a deregistration or suspension order:
6. may face consequences under subpart 3 (which relates to enforcement of licences).

7. If a person (A) who gives advice on behalf of a financial advice provider (P) contravenes a duty provision, liability is as follows:

8. if A is a financial adviser, A—
   1. is not civilly liable for the contravention; but
   2. may be subject to either or both of the following:
      1. disciplinary action:
      2. a deregistration or suspension order:
9. if A is an individual but not a financial adviser, A is not civilly liable for the contravention:
10. if A is an entity, A may be civilly liable for the contravention:
11. P—
    1. may be civilly liable for contravening the duty provision as a result of the operation of sections 535 and 536 (which relate to the attribution of state of mind and conduct) (but see also section 431U, which limits when pecuniary penalty orders may be made); and
    2. may be liable for contravening section 431Q:
12. if A was engaged by P indirectly through 1 or more interposed persons (as described in section 431E(b)), each interposed person—
    1. may be civilly liable for contravening the duty provision as a result of the operation of sections 535 and 536 (which relate to the attribution of state of mind and conduct); and
    2. may be liable for contravening section 431Q.

13. If an interposed person (as described in section 431E(b)), contravenes section 431Q or 431R, that person—

14. may be civilly liable for the contravention:
15. is not liable to disciplinary action or a deregistration or suspension order:
16. if they are a licensee or an authorised body, may face consequences under subpart 3 (which relates to enforcement of licences).

17. The fact that an interposed person may be liable under subsection (4)(e) or (5) does not affect the liability of any other interposed person or of the provider.

18. This section—

19. does not affect any liability that a person may have for a contravention as a person who is involved in the contravention (see section 533); and
20. does not affect any criminal liability that a person may have for a contravention (for example, under section 511 for contravening section 431P); and
21. does not limit the exercise by the FMA or a court of any of its powers under Part 8 other than subpart 3.

22. In this section,—

    civil liability, in relation to the contravention of a provision that is a Part 6 services provision (see section 449), means civil liability under subpart 3 of Part 8 for that contravention

    deregistration or suspension order means an order under section 469(2) in relation to a person’s registration under the Financial Service Providers (Registration and Dispute Resolution) Act 2008

    disciplinary action, in relation to a contravention of a provision, means disciplinary action under Part 5 of Schedule 5 for the conduct constituting the contravention.