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[Weekly Wrap] Bank bashing

This week got accused of bank bashing. It's a topic I wanted to discuss because the role of banks in the financial advice space will be the centre of much debate as we head into a review of the Financial Advisers Act next year.

Friday, September 12th 2014, 11:30AM 1 Comment

A number of years ago when I first met one of the key people in the FMA's Intelligence Unit he asked me what is the biggest problem in the market. The answer offered up was how banks were selling KiwiSaver. Nothing much has changed there. 

Figures you will see very soon reinforce how banks have been able to capture and control KiwiSaver without the use of AFAs.

Unfortunately nothing much has changed - from the outside anyway. 

However, I have it on good authority that FMA chief executive Rob Everett has spoken to the boards of all the banks. The FMA's position, I understand, is that one of the biggest systemic risks in the financial markets in New Zealand is KiwiSaver. The authority's attitude here borders on obsessive. 

The bank's haven't necessarily looked at it this way, and consider how they sell KiwiSaver as being within the rules.

This will be an issue which gets plenty more airtime and it will look like bank bashing to some.

However we also know banks play an important role in the market. They have many qualified advisers and are potentially the training ground for new advisers to come into the industry. 

Also, banks are very active in the advice space with their massive private bank arms. These fly below the radar, but are significant operations.

You can read the story here.

What we don't need now is another "scandal" to tarnish the investment and advice sector. Unfortunately the goings-on at van Eyk are shaping up to be just the event we don't need.

After van Eyk took over the Perpetual Trust in New Zealand its boss Mark Thomas talked of picking up more advisory firms. Good Returns understands that following this mess all the van Eyk assets are for sale. The advisory business is likely to end up with Craig Stobo's Saturn Portfolio Management. Discussions are on-going with other parties about the Blueprint Funds offered in New Zealand and a superannuation fund which has around $66 million in assets.

In other news this week it was interesting to hear Newpark managing director talk about how the insurance industry needs to regulate itself before regulation is forced upon it. Interestingly he sees this as being the role of the insurance companies rather than the dealer groups.

Our most commented on story was one about the affordability of wrap platforms. The debate on fees is always a hot topic for some advisers!

Later today we expect to see reports from the FMA on QFEs and KiwiSaver. When they are out we will have stories on Good Returns for you to read.

Next week is a busy one with lots of events on. See what's happening in your area here.

The latest appointment news and jobs are in our People page.


« Regulation of liquidity ponderedIFA working on pro-bono offering »

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Comments from our readers

On 12 September 2014 at 2:53 pm Gavin Austin ABCompliance said:
With respect to the van Eyk debacle I hope the FMA watch this carefully. Saturn are not without its past problems as it closed some funds a few years ago that didn't have a happy outcome for investors. The regulator should have a greater part to play in these sorts of things if they are really concerned about investor confidence. Blueprint Funds to Saturn has a certain feeling of jumping from the frying pan into the fire. I feel sorry for the poor advisers and clients associated with these entities.

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