Page 23 - English-DBINZ brochure-2019

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ə Investment planning services - financial advice based on an analysis of the individual’s overall financial
situation and goals
ə Discretionary investment management services.

The regulatory controls on a financial adviser depend on the type of advice they offer, the financial
products involved and characteristics of the client (ie whether they are “retail” or “wholesale” clients).
For example:
ə Authorised Financial Advisers (AFAs) are individual advisers who are subject to the most rigorous
licensing, conduct and disclosure obligations. AFAs can give advice on all types of financial products
to retail and wholesale clients. Only AFAs can provide investment planning services to retail clients
ə Qualifying Financial Entities (QFEs) and their employees are subject to less rigorous licensing and
conduct obligations but QF employees can only give advice to retail clients on simple financial
products or more complex products that are issued or promoted by the QFE
ə Other registered financial advisers who are not AFAs can only give class advice or personalised advice
on simple types of financial products.

Financial advisers are required to make disclosures to their clients under the FAA that vary depending on
the categories they fall under.
The FAA also regulates the provision of broking and custodial services to New Zealand “retail” and
“wholesale” clients. The regulatory controls imposed on brokers/custodians to retail clients (which
include disclosure, conduct and property and money handling obligations) are more onerous when
compares to brokers/custodians that only provide services to wholesale clients.

Please note – the description sets out the regulation of financial advice and broking/custodial services
as at the time of writing (March 2019). The FSL Bill provides for law reform that will repeal the FAA and
move to regulating financial advice and broking/custodial services under the FMCA. The new financial
advice regime in the FMCA represents a material re-write of the current regime and will impose new
licensing requirements on financial advice providers. The broking/custodial regime will be largely carried
over to the FMCA in its current form. We expect that the FSL Bill will be enacted around early 2019,
with transitional licencing for existing industry participants beginning in by the end of 2019, and the
transitional regime coming into effect in May 2020.

Banking in New Zealand

The banking industry in New Zealand is prudentially supervised by New Zealand’s central bank, the
Reserve Bank of New Zealand (Reserve Bank), whose powers are contained in the Reserve Bank of
New Zealand Act 1989. The Reserve Bank manages monetary policy with the intention of achieving and
maintaining price stability and as prudential supervisor is responsible for promoting a sound and efficient
financial system and avoiding significant damage that could arise from bank failure. The Reserve Bank
produces and manages the New Zealand currency. While the Reserve Bank is fully owned by the
New Zealand Government, it has operational independence.
Any financial institution that wants to operate or undertake activities in New Zealand and use the word
‘bank’, ‘banker’ or ‘banking’ in their name or title must apply to the Reserve Bank to become a registered
bank. As of March 2019 there are 26 banks currently registered in New Zealand. These include
prominent Australasian banks such as ANZ Bank New Zealand, ASB, Bank of New Zealand, CBA, Kiwibank
and Westpac, and some well known international banks such as MUFG Bank (previously known as Bank
of Tokyo-Mitsubishi), Citibank, HSBC, Rabobank, Industrial and Commercial Bank of China, and Bank of
India.
A financial institution that wants to operate as a bank in New Zealand may choose whether it wants to set
up a branch or a local subsidiary in New Zealand.