New adviser model promoted at last minute
On the eve of adviser regulation it appears a new model is being promoted strongly to lawmakers, although it hasn't had wide discussion in the industry.
Thursday, July 10th 2008, 6:53AM
These institutions would be responsible for regulating advisers who sell their products.
While there has been little debate on this model, the large majority of organisations which made submissions to Parliament's Finance and Expenditure Select Committee on Monday argued that institutions should be "accredited" and they would take the responsibility of regulating advisers who sell their products.
Tower, though, is taking a standard against its peers arguing that regulation should be done on a personal level with each adviser joining an appropriate body for regulation purposes.
Reports from the select committee hearing suggest the Institute of Financial Advisers supported that model, and it was opposed to the idea of the Securities Commission setting rules, enforcing them and investigating complaints.
Tower Investments chief executive Sam Stubbs says "this is industry changing legislation being done for a real reason."
The reasons being investor protection and to build trust in the advisory industry.
Stubbs says that if trust is to be restored to the industry, then investors need to know the person they will be getting advice from will be held personally responsible for that advice and will not be able to hide behind an organisation.
He says that "aligning advisers with product manufacturers doesn't make sense."
He says it may have short-term benefits, but it isn't the best option for the long term and it won't prevent poor advice from happening again.
The accredited institution model "is not good long term for the advisory industry."
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