Regulating the financial services industry could well be on the cards, according to AIA general manager David Whyte.
He says the release of the Commerce Ministry's discussion paper on the role of the Securities Commission and the Securities Commission's paper on the life insurance industry are pointers that the Government may be considering some form of regulation.
The former report asks what the role of the Securities Commission should be, while the commission's discussion paper gives a resume of industry practices and the state of the archaic regulations it works under.
"Certainly there is enough concern being expressed by both documents to indicate regulation," he says.
The commission's paper outlines the many shortfalls that exist in the legislation that currently covers the insurance industry.
Part of the problem is that it is one of the oldest statutes in the books and needs overhauling, on the other hand there have been some "questionable" practices going on within the industry.
Whyte says the industry has itself to blame there and it may get some comeuppance.
He also says that in the public's mind the insurance industry has a "shitty name for sharp practices."
Politicians, he says, can exploit this opportunity through regulation to catch a few votes.
If regulation is pursued the Government is unlikely to drop a bombshell and just do it, rather it is more likely to have a reasonable degree of consultation with the industry and the public.
He doubts regulation in New Zealand would be as stifling as the regime implemented by the government in the United Kingdom.
However, regulation may go as far as licensing intermediaries, as is done in other jurisdictions such as Australia, and there appears to be a wish by Government to have tighter controls over how investment funds are handled and controlled and how products are distributed.
Regulating the financial services industry could well be on the cards, according to AIA general manager David Whyte.