Skill level 'has dropped'

In his submission to the Code Committee on its rewrite of the Code of Professional Conduct for Authorised Financial Advisers, he wrote: “Prior to the Code the better financial advisers were aiming to obtain a level seven qualification, via a graduate diploma and CFP/ CLU. The need to obtain level five before getting AFA discourages new entrants from continuing on to the Level seven qualification.”

He said level five was only acceptable as an interim measure or for advisers dealing with category two products.

“The Code Committee and FMA need to make it clear that in the medium term the baseline assessment for category one advisers should be increased above level five, preferably to level seven. One of the lessons of the recent financial crisis and the collapse of finance companies is that the level of theoretical expertise required of an investment and/or financial advisers is at a high level. The level of technical competency displayed by NZ advisers has in general been low.”

The FMA highlighted similar concerns in its report on stakeholder feedback last week. It said there were broad concerns among those it spoke to that the adviser licencing requirements were not strong enough, there was a perception that insufficiently-qualified advisers were operating, that the RFA designation was meaningless and that QFE advisers were under-regulated.