IFA slams ‘nanny state’ attitude to advisers
The Institute of Financial Advisers has spoken out against a proposed new law that could severely limit advisers' ability to prospect for new clients, describing it as "nanny state".
Friday, May 11th 2012, 6:00AM 8 Comments
by Niko Kloeten
As reported by Good Returns, concerns have been raised over section 71 of the Financial Markets Conduct Bill, which deals with "unsolicited offers" of financial products.
The section would restrict the ability of authorised financial advisers and QFE advisers to "offer" financial products, allowing them only to offer to existing or former clients, while non-QFE registered financial advisers would be unable to "approach" anyone other than people in trade.
IFA president Nigel Tate said he was aware of anti-door to door salesmen provisions in existing law being brought over to the bill but wasn't aware exactly how far the proposed changes went.
"I suspect if the legislation is taken to the extent described by [Chapman Tripp partner Tim Williams] then it is probably an unintended consequence."
He said restricting the ability of advisers to approach potential clients would lead to bad outcomes not just for advisers but for the wider public, particularly given New Zealand's problems with underinsurance and low levels of financial literacy.
"Clients don't go looking for financial advice," he said. "The range of risk products are a prime example of where it's sold not purchased."
Tate said approaching a client without "offering" a financial product would be difficult as advisers need to go through the areas in which they are able or unable to provide financial advice.
He said restricting who advisers can talk to is unnecessary given they need to act professionally under the requirements of the Financial Advisers Act.
"We're supportive of a free and open market with appropriate regulation but we're not supportive of any nanny state where the government decides whether the clients should be offered products."
Niko Kloeten can be contacted at firstname.lastname@example.org
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