No rush for regulation, SIFA members told

It could be up to three years away before the proposed regulation of financial advisers comes into force, delegates at this week’s Society of Independent Financial Advisors (SIFA) were told this week.

Friday, May 25th 2007, 6:45AM

by David Chaplin

Murray Weatherston, who was elected as SIFA chair at the Auckland conference replacing Peter Hensley, told the audience it would probably take Parliament 12-18 months to pass the new adviser legislation followed by a transition period of up to one year before regulations came into play.

“I think the MED [Ministry of Economic Development] understands now that the system isn’t broke... I doubt if the adviser legislation is high in Parliament’s order paper,” Weatherston said.

He said there have been “five messages from the MED” in response to submissions on the governments draft adviser legislation proposals:

There will be more than one approved professional body (APB)
Legislation will catch all those who are deemed to give financial advice - ie - the tiered adviser approach has been discarded
The definition of financial advice will not be tied solely to product
Individual businesses should not be APBs
A single disputes resolution process is favoured - however, the government has not decided on this yet.

A spokesperson for the MED told Good Returns yesterday the Cabinet would make a decision on the adviser legislation at the end of June.

Weatherston said until the “colour of the legislation” was visible SIFA, along with the Professional Advisors Association (PAA) and the Life Brokers Association (LBA), would not progress any further on developing an APB.

He said the three bodies remained committed to building an APB independent of any industry organisation. Last month the Institute of Financial Advisers (IFA) broke away from the joint talks and has signalled it would apply for APB status in its own right.

“There is a difference in philosophy [between IFA and the other three industry bodies]... we think the APB should be independent of industry bodies, they have a different function,” Weatherston said. “The APB is a licensing body while industry bodies provide education pathways and other member benefits... Our APB will be minimalist, it will do all it needs to do to meet the standards but nothing more.”

In a vocal show of support SIFA members backed the move to continue with an independent APB.

Last night LBA members were expected to approve a proposal to merge with the PAA creating a body with about 800 members. SIFA has close to 80 members.

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