Know your rights
Under the Financial Advisers Act, your financial adviser must:
- exercise care, diligence and skill
- only provide financial services they are registered for
- provide you with key information
- not mislead or deceive you.
Under the Financial Markets Conduct Act (FMCA), financial advisers must not:
- mislead or be deceptive
- make false or misleading representations
- make unsubstantiated representations
- in the course of unsolicited meetings, offer financial products that you didn’t ask for.
All financial advisers in New Zealand or their employers must be registered on the Financial Service Providers Register(external link) . They must also belong to an independent dispute resolution scheme(external link) under the Financial Services Providers (Registration and Dispute Resolution) Act.
Authorised financial advisers must also follow their Code of Professional Conduct. Among other things, the code requires them to place the client's interests first, and act with integrity.
Under the Consumer Guarantees Act, financial advisers must ensure their advice:
- is given with a reasonable degree of care and skill
- meets the purpose you are seeking advice for
- is given in a timely way
- is reasonably priced, if a price is not agreed beforehand.
If the advice leads to problems, you can get your adviser to sort them, or ask for your money back. If the problem can’t be fixed, you can ask for compensation.
Read Faulty or unsatisfactory services to find out more.
Even with low risk products you can still lose your money.
What a financial adviser must tell you
A financial adviser must provide information about himself/herself, as well as the services provided. The adviser must also disclose:
- if he/she has been bankrupted, or disciplined, or has any criminal convictions
- how you can make a complaint, and which dispute resolution scheme you can go to.
An authorised financial adviser must also give you a written statement that tells you about:
- the services offered and any limitations
- the fees, and how the fees are charged
- any relevant conflicts of interest.
See What good advice looks like (external link) on the Financial Markets Authority (FMA's) website to find out more.
Payment by fees or commission
Ask your financial adviser to explain what fees they charge and how they are paid. It is important to know that many financial advisers are paid on commission from the product provider.
See Paying for advice (external link) on the FMA's website to find out more.
Peer-to-peer lending and crowdfunding
New forms of non-bank lending are becoming popular, mostly done over the internet. However, crowdfunding providers and peer-to-peer lenders still have to be licensed by the FMA.
See Peer-to-peer lending and crowdfunding on the FMA's website for more information.