These regulations, which came into force on 1 July 2011, amend the Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 by:
- extending the existing definition of pure risk contracts of insurance (which are classified as category 2 products under the Financial Advisers Act 2008 (FAA) by virtue of being excluded from being investment-linked contracts of insurance) to allow pure risk contracts of insurance to provide for premium refunds. The extended definition is limited initially to 5 years, providing an opportunity to review its operation;
reclassifying the following products as category 2 products under the FAA:
- fixed term deposit products offered by the Public Trust;
- bank deposit notice products (which are deposit products issued by a registered bank under which funds are on call, but subject to a minimum advance notice period). These products may also be issued through a PIE structure. This reclassification is limited initially to 5 years, providing an opportunity to review its operation; and
- certain building society redeemable shares (which are akin to term deposits) if the building society is also a registered bank; and
- providing a new exemption from the FAA for operators of registered retirement villages that provide advice or other services in the ordinary course of their business relating to the acquiring or disposing of occupation right agreements for their retirement village. This conduct is regulated under the Retirement Villages Act 2003. The exemption extends (under section 14(1)(q) of the FAA) to employees and other persons acting in the course of, and for the purposes of, the operator's business.
For details of the policy decisions relating to these regulations see the Cabinet Paper released last month.