A financial adviser is an individual who performs a financial adviser service. Someone gives financial advice when they make a recommendation or give an opinion or guidance in relation to acquiring or disposing of a financial product. An authorised financial adviser is an individual who is registered and authorised by the Financial Markets Authority (FMA).
Financial advisers are regulated by the provisions of the Financial Advisers Act 2008. The responsibility of overseeing this legislation rests with the FMA.
The legislation aims to protect investors by requiring that financial advisers be competent. This requirement is intended to ensure that the financial advisers available to investors and consumers have the experience, expertise and integrity to match a person effectively to a financial product that best meets that person’s need and risk profile. The Act also aims to ensure that financial advisers are held accountable for any financial advice that they give. The Act requires financial advisers to manage conflicts of interest appropriately.
A code governs authorised financial advisers as well as providing a basis for discipline. It details the minimum standards of adviser competence, knowledge and experience, ethical conduct and client care and lays down guidelines for continuing professional development and specifies standards for the various classes of authorised financial advisers.
Qualified financial accountants are not defined as financial advisers and are not required to comply with the provisions of the legislation.
Financial advice given by an accountant, who is not qualified statutory accountant, in the course of that person’s professional practice, is not normally exempt from the need to comply with the requirements. There is an exemption only if that advice given by an accountant is a necessary incident of professional accounting advice. Even there the implementation of the code requires accountants to undertake further training.
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