Thanks for the early comments. This blog, our attendance at roadshows and the various communications we have underway are all about increasing the flow of applications. I'll be covering several topics at the roadshows and as we get a feel for common concerns I'll blog in more detail on these areas. Before we end the week though I'd like to respond to John and Murray.
John asks where all the advisers are. We know some 2,000 have passed Set B, a further 1,000 have booked to do Set B, and almost 100 people a week are still enrolling for exams. So the answer to John's question is that they are leaving it very late. That's because they've only got six weeks to apply for authorisation. 31 March is the deadline and many people have a lot to do by then.
We are neutral on what the numbers of the different types of advisers in this new regime will be. Any new regulatory regime has an impact on the shape of a market - this is borne out by overseas experience. In NZ, advisers can choose to be AFAs within and outside QFEs, QFE advisers and RFAs. Similarly, investors will be in a better position to choose the type of adviser that’s best for them. What's important for us is that there is adequate protection for consumers whichever adviser they choose.
To Murray's question, Evelyn Cole, Manager Consumer Policy at Ministry of Consumer Affairs has provided this reply:
"All financial service providers who are required to join a dispute resolution scheme are also required to pay a levy which is collected by the Companies Office at the same time as the financial service providers registration fee. Collection of the levy is provided under section 78A of the Financial Service Providers (Registration and Dispute Resolution) Act (the Act) to recover some of the costs of the Ministry of Consumer Affairs' functions to administer the dispute resolution regime. Administration of the regime includes approval of dispute resolution schemes, monitoring of the approved schemes and the reserve scheme and raising consumer awareness of financial services dispute resolution. Based on an estimate of 6,000 financial service providers in the finance sector, the total levy collected will be about $180,000."
Evelyn goes on to say; "The Financial Service Providers (Registration and Dispute Resolution) Act requires the establishment of a reserve scheme. Dispute Resolution Services Limited has been appointed to provide the reserve scheme which is called Financial Dispute Resolution (FDR). The Financial Service Providers (Registration and Dispute Resolution) Act provides for the funding of the reserve scheme. Section 72A of the Act specifically provides for rules to be made to collect membership and complaints fees from reserve scheme members. These fees are charged to recover the operating costs of the reserve scheme, and are payable to the Ministry. The Ministry has a contract with DRSL to pay them for the delivery of the reserve scheme."
I'll be back in touch again this week and look forward to seeing many of you at the roadshows.
Mel
Hi Mel, thanks for your reply. Of the numbers quoted above who have passed Set B already (or booked to do so) how many of these are actually bank staff? The banks seem to be making only "select" staff be AFA but combined their numbers will add up. Aside from investment advisers who must be AFA I don't think the majority of insurance and mortgage advisers are leaving it very late to enroll at all. Rather they have simply elected to be RFA instead.
On 21 February 2011 at 12:53 pm Anon2 said:
Thanks Mel - its good to get feedback that you don't care whether advisers are RFA, AFA etc rather that we simply care about the level of advice being appropriate. Initially there had been concern amongst insurance and mortgage advisers that their would be a large marketing campaign discrediting RFA's and promoting AFA's - has this changed?
And John - its the end of Feb - RFA's have little to no time left to register if they want to continue trading in April. I'm sure if everyone was taking your approach there would be a large back log especially with the security checks.
On 21 February 2011 at 2:35 pm John said:
Given the track record of this process to date who's to say the rules aren't changed on us all again anyway next month?
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