Cowboys ad complaint shot down by ASA
Unregistered financial advisers can be labelled ‘cowboys’ without giving offence to the rest of the industry, according to the Advertising Standards Authority (ASA).
Friday, October 14th 2011, 5:00AM 
6 Comments
by Benn Bathgate
The ASA ruled the description was fair in its rejection of a formal complaint from Camelot NZ adviser Stephen Parr against the controversial Financial Markets Authority (FMA) ‘cowboy' newspaper adverts that heralded the start of the new adviser regulatory regime.
"I think the key point is that the complaint was deemed worthy of putting to the Board, so it is significant that it wasn't dismissed," said Parr.
"The point has been made that the advisory fraternity did not think it was a very tasteful or appropriate advertisement."
In his complaint to the ASA Parr claimed the advert unfairly maligned the whole advice industry.
"The advertisement clearly undermines the professionalism and integrity of financial advisers," he said.
"The advertisement is misleading and may cause the consumer to believe that most financial advisers are cowboys, which they are not."
In their ruling the ASA said "the advertisement did not reach a threshold to cause serious or widespread offence in light of generally prevailing community standards and did not denigrate identifiable products. The board also considered that the advertisement did not play on fear."
The FMA also responded to the complaint defending the use of the term "cowboy", saying it is colloquially used to describe someone unqualified for a particular job.
"Specifically in the financial markets arena, New Zealand has unfortunately been perceived for some time as a "wild west" with few rules and little law enforcement," it said.
For Parr however, the advertising campaign remains a missed opportunity.
"We were told there was going to be a public educational campaign - we weren't expecting it in this form," he said.
"There was very little useful information, so really the public is no wiser, and that's an important point."
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
Thank you FMA for your continual education of the public.
The main point must be that the FMA proved their failure to actually provide a positively effective public campaign?
When I was active in the financial planning profession from mid 1980s till the sale of my successful business in 2001, I taught those within our large business that you should think of yourself more in a form of 'psychology' than a 'financier', because if you were simply in finance you would present your clients with a selection of say 3 portfolio spreadsheets and ask them to take their pick..!
This "psychology" factor is relevant to how the FMA should approach public campaigns to aid financial planners.
A senior memeber of the FMA was recently asked if he (they) were typically financial planners in any form, and the short answer was ...no.
That appears a little like the 18 year old marriage guidance councillor (not only never married, but never even had a live-in relationship)trying to convince a struggling couple that she could help?
I suggest that most mature experienced financial planners would take great umbrage at the claim by the FMA that NZ had a perceived reputation as a "wild west" organisation and with "few rules and little law enforcement.!"
The fact remains that NZ had an SFO which in the main failed in it's role, and every finance company had a registered prospectus (written rules)..supposedly run by trustees.!
Governments seem to fail when trying to become involved in private enterprise (well proven in current news items such as the failure to update a simple bill to ensure that $30 million is available toward the MV Rena disaster instead of an old one which only provides $12 million..!!!)
Remember,...these forums on sites such as Good Returns are not so much "public" sites so the investing public does not generally access any debates, it is more for those in the profession to use to air "in-house" views.
Likewise, where on earth is the "public help" provided by the FMA who appear to have failed miserably in their expected efforts to help create a positive awareness to the investing public by way of a truly effective public campaign.
Is that a more extensive summary of part of what I read into Mr Parr's (experienced)question mark point on how the FMA think they have done a good job so far?
And...to finish, surely the courts are partly to blame too?
eg; why did the head of Blue Chip only get a "proverbial slap over the wrist with a bus ticket" ($30,000 fine) for what most have considered was a blatant stealing of peoples equity out of their homes?
Or the head of the now defunct Money Managers First Step Finance not even being questioned over a fund that appeared clearly to have used "related-party transactions" to melt hundreds of millions of dollars of investors money away from them?
Industry bodies stemming from way back to the IAFP and Good Returns and Financial Alert have all collectively done what all must agree to be a good job of keeping an eye on members as best as they can.
Surely, if there is 'any' part of old NZ financial stuff that suggests a form of "cowboys" or "wild west" then why did the (government) court system not apply real justice as a warning to others to not taint an otherwise fine profession?
Maybe this is a fair elaboration on the points Mr Stephen Parr endeavoured to make?
If the FMA decides to do a good job of their role, they could make NZ more of a model to the rest of the world.
After all, if regulation is to be the big saviour, I for one fail to forget that it was the biggest and most regulated economy in the world (USA) which created the whole GFC that set all the problems.... right up to date...into motion?
Michael D.
If I may add, the Law allows finance companies to be owned by Trusts set up by its directors who are also the beneficiaries. Can a settlor also be a beneficiary to a Trust? ie, you can touch my left pocket but not my right pocket. Anyone ever bought a present for yourselves?
This rule allows fraud to be committed legally and encourages it. You can prove mis-management and mis-leading / false information, but and it is very difficult to prove fraudulent intention, which I believe carries a much heavier penalty, under those rules.
Since advisors can be sued by the consumers for negligence, then can advisors also sue the authorities for allowing such fraudulent or badly managed finance companies to operate? ie., those whose funds which falls into the criteria of clients' investment profile, sold by advisors, who were being sued because the prospectus did not tell the true picture? Have you noticed the speed in which the Security Commission was closed?
Finally, wondered if the party/ies involved in this very badly written piece of regulation will to get it right for free? Afterall, if you paid your car mechanic who didn't fix the fault properly the first time, he will have to get it rectified for free, right?
Might I add that the 'car" should then be very roadworthy without any further tweeking required.
Surely there are more of you in the profession who can add your views to very valid points raised by Mr Stephen Parr?
After all, it is important to your business future, like it or not.!
Michael D (onovan)
Wasn't your business 'Money Managers'?
"Or the head of the now defunct Money Managers First Step Finance not even being questioned over a fund that appeared clearly to have used "related-party transactions" to melt hundreds of millions of dollars of investors money away from them?"
Your related party partner?
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good on mr parr for his efforts, i certainly think the fma could have come up with something a little more interesting and positive.....but i guess they just fall down like everyone else who doesn't really understand what we do