Cowboy wrangle continues
Financial Markets Authority (FMA) chief Sean Hughes inference that the regulator's controversial ‘cowboys’ advert was approved by adviser bodies before launch has been challenged by both the NZMBA and IFA.
Friday, July 8th 2011, 5:00AM 
16 Comments
by Benn Bathgate
NZMBA chief Darren Pratley said that while he was shown the advert before launch, it was made clear that this was not a collaborative process and no changes would be made.
"What happened was I'm sitting in a room at the FMA office and I was given a piece of paper which had an image of the new advertising on it. I looked at it and went - I think we should make a few changes," Pratley said.
"I was told no. We can't make any changes. That's what's going out, I just thought you should know."
Pratley was eager to set the record straight after reader comments to the original Good Returns story suggested some advisers believed the advert had the NZMBA's blessing.
"There is no way in the world that we were consulted, there is no way in the world I am overly comfortable with the image they used," he said.
"I accept that they had to come up with a campaign but there was actually no consultation, there was no ‘guys, we need to get the message across, what do you think?'"
IFA chief executive Peter Lee took a neutral stance on the advert, saying "it's something that's purely up to the FMA to decide how it wants to communicate".
The IFA president Nigel Tate was less forgiving.
"I personally, as a practitioner, find it offensive and it's not a good way to build a collaborative relationship with the industry, especially when you're the new kid on the block."
"We've had 20 years of change in our profession, we've had 20 years of evolution and 99% of the rogues and the cowboys that may well have roamed the prairie have gone," he said.
Despite their disapproval of the advert, both Pratley and Tate stressed their commitment to working with the regulator.
"There are people in the industry that actually support the direction we're going in and we actually want to make this a supportive, constructive change to get the consumer better advice," Pratley said.
Tate also said it wasn't his wish to bash the FMA over the issue.
"It is my desire however to maintain the relationship we've developed with the FMA over the last five years or so, with the Securities Commission as it was, we want to maintain that and we don't want this sort of thing to break down the level of trust that we've had."
"It's not a good start. I'm hoping that things will improve from here, we can get past it," he said.
BLOG: Your advice (on FMA ads) please
Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz
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Comments from our readers
On 8 July 2011 at 10:12 am traveller said:
It seems to me that what the FMA lacks is a person who understands what decent PR is all about On 8 July 2011 at 10:57 am Independent Observer said:
The IFA is a voluntary subscription, whereas the Regulator is not.
If the IFA wishes to attract & retain membership, it will need to take a view on a range of industry sensitive issues – including this one.
Lobbying, providing a collective voice and standing up for its members must be part of the IFA’s value proposition – otherwise I’m at a loss to understand its purpose.
On 8 July 2011 at 11:06 am Broken record said:
Set the record straight huh? This is more like a stuck record, playing the same thing over again. The powers that be do something, the industry reps speak out, after. Hughes has shown again he likes to take his own interpretation of things by translating showing the industry bodies the material to be gaining their approval of it.
Pratley: Knew about the campaign, didn’t like the process or the material; Stayed silent rather than be on the front foot. Could have come out prior to the launch, but the first advisers knew of the advert was when it hit the stands. That’s the ‘record’, crooked or straight, too little, too late.
Lee: Neutral position, trying to stay chummy with the powers that be. In other words the industry voice is mute on this.
Tate: What's this "I personally..." stuff? The president of the IFA won't speak for the IFA?
The IFA members are overwhelmingly saying that there is nothing supportive or constructive about this campaign. Which we are paying for.
The industry bodies need to take a deep breath and find some more gumption. You are the voice of the industry and you knew about this campaign prior to it coming out and didn’t act. Didn’t even warn us that they were taking a bad direction. Since the FMA only showed you the material they were running with and chose to interpret that as gaining your approval then as much as you wish to work with them, if they are not working with you then you shouldn’t just roll over with the punch. Stand up and speak up. Failing to do so has indirectly made Hughes’ incorrect assertion effectively true while simultaneously putting a big dent in your credibility.
My IFA renewal just went to the bottom of the heap.
On 8 July 2011 at 11:55 am Benn Bathgate said:
In response to Broken Record's comment Darren Pratley did say he was shown the material under an embargo preventing any discussion ahead of the adverts release.
Apologies for any confusion that omission from the story has caused.
On 8 July 2011 at 12:28 pm Mike Beuvink said:
I have just had this film clip on the FMA website pointed out to me, but to be honest I'm at a bit of a loss to understand all the hoo-ha, personally.
If one follows the links associated with the little film clip, it comes up with all the things that an investor should be looking for when checking out a financial adviser.
To me, the inference from the Cowboy clip and the associated links is that if your adviser doesn't match up to the requirements, then perhaps they should not be a financial adviser and a client should not be getting advice from them. I don't have any problem with that.
I haven’t had a client ring me yet and accuse me of being a cowboy. I haven't actually heard from a client or contact who's even seen the clip.
Is there something in there that I am missing, or are a number of advisers out there being a little too precious?
Personally, I'm not getting too worked up and will just concentrate on doing the right thing for my clients.
Have a good weekend
On 8 July 2011 at 12:34 pm Broken record said:
Shows more negatively then on the FMA then doesn't it? What really matters now is what they all do about it.
The embargo has expired and still nothing, other than responding to questions in interviews. No comeback, no campaigns of their own. No value for my membership on $$ something so important.
IFA, LBA, NZMBA, PAA, FAANZ, where are you? You knew the FMA would be launching a campaign come 1 July, where is yours? Why didn't you have one going in bloody June?
Financial Awareness Week had better be seriously huge.
On 8 July 2011 at 12:57 pm Mac said:
The FMA had an embargo on a (derogatory) advertisement? I can undestand an embargo on a press release or a major announcement, but for an advertisement! Just demonstrates the arrogance of the FMA and implied disrespect to the IFA. On 8 July 2011 at 1:39 pm Amused said:
Let’s not forget it wasn't so long ago that Pratley and his chums at the NZMBA were pushing for all mortgage brokers to be authorised (AFA). This desire had nothing to do with improving standards amongst brokers, it was aimed solely at the association's own survival by giving it a training role to play in the new regulatory environment post 1st July. Given that the vast majority of mortgage brokers are Registered Financial Advisers and DO NOT need to belong to a professional body to demonstrate ongoing competency (section 37 of the FA Act states that ONLY an authorised financial adviser must comply with the Code of Professional Conduct) one has to seriously question the “value for money” of NZMBA membership going forward. Mortgage Link clearly have made this conclusion already by saying to its members now that NZMBA membership is only “optional” On 8 July 2011 at 3:33 pm John Honest said:
Will the ad. further the FMA's objective of increasing consumer confidence in the industry, or will the reference to 'cowboys' only strengthen the public perception that we are a bunch of cowboys?
The damage is mitigated only if the ad. give the public confidence that 'Shane' Hughes will be able to drive all the bad guys out of town, but does it achieve that?
On 8 July 2011 at 7:18 pm Cynic said:
Perhaps we there is a new role emerging for the IFA - providing support and guidance when they are investigated by the FMA. So far, the FMA is not positioning iteself as a "Referee" as Mr Hughes recently stated. On 8 July 2011 at 10:18 pm Forthright said:
I wonder of the Medical Council of NZ, NZ Nurses Organisation, Law Society, Society of Accountants or the Dental Association would produce such an advertising campaign to push their message of professionalism and protecting patient or client interests? I think the answer would clearly be no. Would these same professional associations allow members to practice without being members of the association? Answer no.
Therefore if you want to provide any form of financial services you have to be governed by a modest government quango and their rules and regulations to make sure the participants act with a regulated professional regard to investors interests. To make matters worse only some classes of participants have to adhere to a code of professional conduct.
With this sort of background it is no wonder the FMA decided on an advertising campaign a truly professional organisation would have no part of.
On 9 July 2011 at 7:20 am tonto said:
seems the NZMBA is reacting the same to this as it did to the Kerry Buddle problem ... "blame someone else and it will go away" and heaven forbid being a "proactive" organization for its members- lets just sit back and be "reactive" like our business partners.. next thing the industry will be the butt of jokes on a Tui poster... Trust Us ...Yeah Right On 11 July 2011 at 8:51 am Peter said:
Like we in the industry have a choice in how the new sherrif polices things. The only way we will get our position across to the public is to do the job we are qualified to do and do it well. My concern is that Wyatt Earp will find one or two "Billy the Kids" out there and condemn us all. Same old story, the few screwing the many. Was it ever different? They have to justify their role, and we have to pay for it.
Instead of being a regulator which helps improve the industry, I worry that they will come in all guns blazing
On 12 July 2011 at 2:02 pm Jo said:
What are you talking about the NZMBA being reactive to the Kerry Buddle problem - Kerry Buddle had been removed from the NZMBA membership prior to any of the media attention regarding her dreadful behaviour. On 13 July 2011 at 2:41 pm Graeme said:
To be fair, there were (and maybe still are) some advisers within our industry who we can do without.
In the past it was too easy to become an adviser and whether you would have called them cowboys or other stronger words is irrelevant.
Unfortunantely we did little to cause our clients to view us as professionals rather than sales people.
The reality is that there were, and no doubt still are, incompetent people in all professions including ours.
While the process was supposed to ensure all advisers are qualified and competent it's success is debatable. I still believe it needs to be harder to become an adviser whether it be AFA or RFA.
In 37 years in this industry I have met a lot of technically qualified and 'competent' advisers whose advice I would not trust.
On 13 July 2011 at 3:02 pm Graeme said:
To be fair, there were (and maybe still are) some advisers within our industry who we can do without.
In the past it was too easy to become an adviser and whether you would have called them cowboys or other stronger words is irrelevant.
Unfortunantely we did little to cause our clients to view us as professionals rather than sales people.
The reality is that there were, and no doubt still are, incompetent people in all professions including ours.
While the process was supposed to ensure all advisers are qualified and competent it's success is debatable. I still believe it needs to be harder to become an adviser whether it be AFA or RFA.
In 37 years in this industry I have met a lot of technically qualified and 'competent' advisers whose advice I would not trust.
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