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Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Additional regulation of financial advice and financial advice services - Additional duties on financial advice providers and interposed persons that engage others to give advice

431R: Duties of persons who engage nominated representatives

You could also call this:

"Rules for bosses of financial advisors to follow when hiring staff to give advice"

Illustration for Financial Markets Conduct Act 2013

If you are a financial advice provider, you must have rules in place when you hire someone to give financial advice on your behalf. These rules must limit what advice they can give and allow you to control when and how they give it. You must make sure the advice they give is suitable for their skills and knowledge.

You and anyone who helps you hire these advisors must ensure they follow your rules and give good advice. You must also keep an eye on them to make sure they are doing the right thing and following the rules.

You cannot give your advisors any rewards that might encourage them to break the rules, such as those outlined in sections 431I to 431P.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS465827.

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Part 6Licensing and other regulation of market services
Additional regulation of financial advice and financial advice services: Additional duties on financial advice providers and interposed persons that engage others to give advice

431RDuties of persons who engage nominated representatives

  1. A financial advice provider (P) that engages 1 or more nominated representatives to give regulated financial advice on P’s behalf must have in place processes and controls that—

  2. limit the nature and scope of the advice that the nominated representatives give; and
    1. allow P to regulate what advice is given and the circumstances in which it is given.

      1. The processes and controls must ensure that the advice given by a nominated representative is commensurate with their competence, knowledge, and skill.

      2. P and any interposed person through whom any of the nominated representatives are engaged must—

      3. ensure that the nominated representatives comply with P’s processes and controls; and
        1. monitor the nominated representatives and the advice they give to ensure that—
          1. those processes and controls are effective and are complied with; and
            1. the nominated representatives comply with their duties under this subpart.

            2. Neither the provider nor any interposed person may give, or offer to give, to any of its nominated representatives any kind of payment or other incentive that is intended to encourage, or is likely to have the effect of encouraging, a nominated representative to engage in conduct that contravenes any duty under sections 431I to 431P.

            Notes
            • Section 431R: inserted, on , by section 29 of the Financial Services Legislation Amendment Act 2019 (2019 No 8).