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Commission unsure how long adviser licences will last

The Securities Commission does not yet know how it will gauge satisfaction that regulatory obligations have been met when the time comes for authorised financial adviser's (AFA's) to renew their licences.

Friday, August 13th 2010, 6:44AM 3 Comments

by Jenha White



Commissioner for Financial Advisers David Mayhew spoke at the New Zealand Mortgage Brokers Association (NZMBA) conference yesterday, saying the Commission only has power to authorise advisers for a specified period so there will be a requirement for AFAs to renew their licences.

"The actual term of the licence period is something that is being debated at the moment."

Mayhew says when AFAs come back for renewal the Commission has to be satisfied that the AFA has complied with all the regulatory obligations, whether it be the Act, the Code or the terms and conditions.

He says that raises a real challenge for the Commission on how it decides satisfaction is met.

"Is it if we haven't heard any customer complaints or if their professional association doesn't have any information to report to us?"

Or , Mayhew asks, is a more proactive approach required with a review of client files to see whether the AFA's advice reflects the process.

"That in turn raises the very interesting point, that any adviser would tell me that there is a certain amount of subjectivity in the advice process. It's an art of signs and there is more than one reasonable answer to any given advice situation. We understand that," he says.

Mayhew then asked if the Commission should instead be looking to go down the path of peer reviews and if so against which benchmarks and with who deciding what the right standards are?

These are all questions advisers are hoping they will have answers to soon as the year slips away with regulation drawing ever nearer and with uncertainty still abounding.

Mayhew says in the end it comes back to the role of industry working with the regulator to develop a partnership.

Jenha is a TPL staff reporter.

« Associations want mortgage, insurance adviser situation sorted[Breaking News] Commissioner asks for Code to be revised »

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Comments from our readers

On 13 August 2010 at 1:11 pm PM said:
The simple answer here is to appoint a bureaucrat ( paid for by the taxpayer)to every adviser in the land. They could drive the advisers car around and watch the completion of the files and sit in on appointments. Since there have been minimal complaints in the past from clients the most likely source of complaints in the future will arise from the authorities. But that problem will be solved by having a bureaucrat in every office. And the term of the licence? Why not make it something realistic like say 5 years.
On 16 August 2010 at 6:49 am traveller said:
Peer reviews? Who is my peer?
On 17 August 2010 at 7:15 pm Murray Chong said:
Why do they have to try and reinvent the wheel.
All good adviser's for the last 6 years attend as many industry training sessions as they can for 2 reasons.

The first is keep educated and the second is to obtain traning credits.

For example the NZMBA requires you to have 50 industry training points in the 2 years and then obtain 25 new points per year after that and if you dont the your out.
Unfortunatley brokers that don't meet this rule can just use another body that does not have such high training standards.

I work out of New Plymouth and 80% of this training is in Auckland or Wellington and a one day traning session is worth only 3 credits, so I do this at least 9 times per year.
This costs me almost $9,000 per year,

All the regulators have to do is to go to a website (which is already up and running) to make sure advisers have these credits.

The Aussie Mortgage Brokering Association got rid of 1500 brokers over night by using this system

It's really as simple as that
Commenting is closed



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