I85PREP
⌘ K
NZ CFS L5 Core study materials
NZ CFS L5 Core study resources

NZ CFS L5 Core: Regulatory and legislative framework for financial services

NZ CFS L5 Core · Work through your exam, one topic at a time.

All guide sections

Regulatory and legislative framework for financial services

What the exam tests

This domain checks that you can place everyday advice inside New Zealand's regulatory architecture: who may give regulated financial advice, what duties attach to a Financial Advice Provider (FAP), and which statutes sit behind the Code of Professional Conduct.

Core framework

  • The Financial Services Legislation Amendment Act 2019 replaced the old Authorised Financial Adviser/Registered Financial Adviser regime. Since 15 March 2021, financial advice to retail clients is given by financial advisers working under a licensed FAP.
  • The Financial Markets Conduct Act 2013 defines financial products: shares, debt securities, managed investment products (including KiwiSaver), insurance contracts, derivatives and DIMS.
  • "Financial advice" is a recommendation, opinion or guidance about acquiring or disposing of a financial product, switching, or exercising product rights. Factual information or a generic calculator is not, by itself, advice.
  • FSLAA duties include complying with the Code, ensuring advisers are competent, disclosing material information, joining an approved dispute resolution scheme and keeping records.
  • Other relevant law: Privacy Act 2020, AML/CFT Act 2009, Fair Trading Act, and the FMA's monitoring and enforcement powers.

Worked example

A client asks whether to move their KiwiSaver from a conservative to a growth fund. Saying "growth funds have historically returned more" is guidance about a financial product, so it is regulated advice. The adviser must act under a FAP, gather the client's horizon and capacity for loss, disclose fees and any conflict, give suitable advice and record the reasoning. Telling the client the fund's unit price and fee is information only; recommending the switch is advice.

Traps

Assuming the AFA/RFA labels still exist; treating a product brochure as advice; giving advice outside the FAP's scope; forgetting Privacy Act and AML duties; believing the Code is optional guidance rather than enforceable.