Fair Trading Act 1986/Consumer Guarantees Act 1993
– still an unwelcome anachronism
12 Section 20(1)(b) sensibly clarifies that misleading or deceptive conduct that contravenes the relevant provisions of the Financial Advisers Act (FAA) does not also contravene the general misleading and deceptive prohibitions in Part 2. This removes a degree of "overlapping liability" between these two statutes.
13 In addition, the amendment made to the Fair Trading Act under section 567 of the Bill sensibly removes the overlapping liability between the Part 2 prohibitions under the Bill and the Fair Trading Act.
14 We submit that removal of overlapping liability should be extended so that:
14.1 liability under Parts 3, 5 and 6 of the Bill cannot also give rise to liability under the Fair Trading Act, and
14.2 liability under Parts 2, 3, 5 and 6 of the Bill cannot also give rise to liability under the Consumer Guarantees Act.
15 Overlapping liability has long been an unwelcome anachronism of our securities laws, and has led to great uncertainty in the financial services market. Removing it is, in our view, imperative, and will result in a much higher level of certainty for (and therefore contribute to greater efficiency in) our capital markets.
16 More specifically, this removal:
16.1 will mean market participants no longer face double liability under multiple pieces of consumer legislation for breach of broadly identical legal tests arising from the same circumstances
16.2 should lower insurance costs
16.3 will give issuers more confidence that they can enter into a single regulatory settlement with the FMA, and not then have to address the same issues with another regulator and risk facing a different outcome, and
16.4 will recognise that these issues are optimally dealt with by the FMA, which is resourced with specialist personnel to deal with them.
- Financial Market Conduct Bill - Part 1 – Preliminary Provisions
- Financial Markets Conduct Bill - Part 3 – Disclosure of offers of financial products
- Financial Markets Conduct Bill - Part 4 – Governance of financial products
- Financial Markets Conduct Bill - Part 5 – Dealing in financial products on markets
- Financial Markets Conduct Bill - Part 6 – Licensing and other regulation of market services
- Financial Markets Conduct Bill - Part 7 – Enforcement, liability and appeals
- Financial Markets Conduct Bill - Part 9 – Repeals, amendments, and transitional provisions
The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.