Banks avoid training costs under new rules, says PAA
Independent financial advisers will face costs to up-skill which banks could avoid under new regulations that would exempt bank workers from having to register before offering financial advice on their products.
Friday, May 8th 2009, 6:53AM
by Paul McBeth
Professional Advisors Association chief executive Dave McMillan predicts a jump in advisers seeking training to become registered with the Securities Commission, a requirement for those planning to give advice on so-called category one products.
Banks can avoid training costs because the new legislation exempts employees and agents of qualifying financial entities, McMillan told members at a roadshow meeting in Wellington.
Older financial advisers are more likely to retire than go through the process of up-skilling to meet the tighter rules, he said.
McMillan was commenting on a consultation paper put out by the Securities Commission that aims to develop a code of conduct for the industry and standardise qualifications.
"Banks were very concerned the number of people they employ" that offer advice on their products would have to undergo training, McMillan said. "I was quite surprised all products are treated as the same risk," he said of the exemption.
The code is moving slowly because the Ministry of Economic Development has yet to appoint a commissioner of financial advisers, a position which will be responsible for setting up a code committee and approving the rules. The deadline for new guidelines is the end of 2010.
McMillan says he is alarmed at delays the review has faced and the slow process of appointing a commissioner. Once that person is in place, he's confident the industry will be well represented by the committee that writes the code of professional conduct. He doubts the act will be ready to be implemented at the end of next year.
Submissions on adviser competence in the latest consultation document released by the Securities Commission last month close on May 29.
Paul is a staff writer for Good Returns based in Wellington.
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