by Susan Edmunds
There has been debate in recent weeks about the future of the RFA designation.
It is expected to be one of the aspects of the Financial Advisers Act put under scrutiny when it is reviewed next year.
Code committee chairman David Ireland said he thought the extent of RFAs’ disclosure requirements was inadequate compared to AFAs’ obligations. Massey University school of economics and finance senior lecturer Mike Naylor said RFAs might need a new title because it was hard for the public to understand the difference between a registered and an authorised financial adviser.
Jenny Campbell, former PAA general manager and now chief executive of the Mortgage Supply Co, agreed a name change could be a positive move.
But she said there was no merit in requiring RFAs to comply by AFA-level rules.
“It would force them to yet another level of paperwork for no reasons.”
She said all the RFAs in the market were upstanding professionals and those who were still around post-regulation were the ones who “really know what they’re doing”. “If you talk to the dispute resolution schemes, there are so few complaints about our area. Everyone’s really happy with the level of paperwork they have to do currently. They’re following good processes, that’s borne out by the lack of complaints. I’m worried about regulation by stealth.”
But Campbell said she had always got the impression that the FMA was not totally comfortable with the RFA designation. “They talk about it being an interim measure. They’ve got to understand our market is different to the rest of the world to a degree. If you want to work as an insurance or a mortgage adviser, you’ve got to be good. There aren’t enough people to support poor performance. If you have a bad reputation you won’t last long.”
Some RFAs would drop out of the industry rather than deal with AFA-level compliance requirements, she said. “If the idea is better advice for consumers, merely giving advisers more paperwork doesn’t mean consumers aren’t getting advice, just that the adviser is covering their butt. The general public needs more advice, not less.”
Too much compliance would drive independent advisers out and lead to consumers being forced back to dealing only with the big providers, she said.
« [Weekly Wrap] Name calling tops agenda | IFA working on pro-bono offering » |
Special Offers
Sign In to add your comment
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved
The 3 key compliance differences between an AFA and an RFA are (1) qualifications (2) disclosure & (3) the Code. If i've missed any key differences I am sure someone will let me know. So which of these do you think will create so much more of a work load to prompt good advisers out of the business? Some risk advisers and mortgage broker voluntarily became AFAs and I dont' think its likely that the qualifications will ever be required to be the same. That leaves 2 areas. Good advisers will more than likely comply with all the AFA code standards anyway so that now leaves disclosure. From my experience with RFA in a compliance sense this is the big stumbling block as they don't want to disclose their remuneration. Other than that I'm not sure why there is such a fuss as I have always maintained that a good adviser (RFA or AFA) will comply with the code standards anyway as that is what professional do.