The review of the Financial Advisers Act (FAA) looks like it could be a rather long and slow process. This week I attended a function in Auckland where FMA chief executive Rob Everett, Code Committee chair David Ireland and MBIE Ian Southall talked about the impending review of the act.
The race track seemed like an appropriate place to discuss the changes as I suspect there will be a lot of going around in circles. Further confirmation came when one of the three speakers called investors punters!
What became clear is that the process is still in its infancy. Indeed MBIE are only just turning their minds to it and the new minister, Paul Goldsmith, appears to have given it little thought yet. The speakers are hoping that it will be a "comprehensive" review of the act, but even that part is unclear.
The FMA had a good grip on the issues which need to be addressed including:
What will worry some participants is that the review isn't scheduled to be completed and given to the minister until the middle of 2016 and then any changes will have to go through the Parliamentary process. Unless there is some sort of urgency then it is probably at least a couple of years until we see any changes coming into effect.
With some of the issues, like banks churning KiwiSaver members, one could argue the horse has well and truly bolted. (Couldn't resist that one!)
Everett raised the interesting question about how the financial advice sector sells itself and its value proposition to consumers.
He also made an interesting comment the review should be seen as tweaking a new system which was put in place after a major meltdown and some of the things which were done may not have been appropriate, rather than saying the review is taking place as it is a sector which has problems.
You can view David Ireland's presentation here
The other big news this week was the NZ Super Fund's decision to dump AMP Capital as one of its managers. This took many by surprise and also illustrates how important people are in the investment process. While no one is saying too much publicly AMP Capital had lost a few key managers and that may well have spooked the Super Fund.
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