24 August 2011

FMA reminds Red Zone homeowners about new advice rules

Media Release
24 August 2011

The Financial Markets Authority is reminding Canterbury residential Red Zone homeowners seeking financial advice about payout offers to check they're dealing with registered professionals.

FMA Chief Executive Sean Hughes said many people will be seeking information and advice about how to afford a new property, insurance cover options or options such as investing a payout amount and renting instead.

"CERA has already provided some excellent sources of information such as the recent Housing Expo, but now people are receiving their individual offer letters from the Government they may need some help deciding the best option for their particular situation.

"When someone offers you a recommendation or an opinion on a financial product such as a mortgage, insurance or investment product, they're offering financial advice, and the law now says those people have to provide you with certain protections," Mr Hughes said.

Financial advisers can include bank staff, mortgage brokers, insurance agencies, financial planners and other types of financial adviser. They need to be registered and offer a dispute resolution service and they have a legal obligation to act with proper care and skill. They must put their clients' interests first and disclose certain important information.

Advisers offering financial planning and investment advice need to meet additional requirements. In Canterbury, financial advisers must be registered, but have until 1 October 2011 to meet the additional requirements to become Authorised Financial Advisers (AFAs). Around 150 advisers in Canterbury have already become AFAs.

Mr Hughes said residents can check an adviser or their employer is on the official Government register at www.fspr.govt.nz. 

"Getting financial advice to help you decide the best option for your situation is a good idea, but make sure the people who offer to help you are properly qualified. Do a quick check online or give us a call and make sure you're dealing with a registered professional," Mr Hughes said.