by Susan Edmunds
They were revealed yesterday, outlining an 18-month process that will start with MBIE working to understand the role of financial advice and financial service provider registration and dispute resolution in improving financial outcomes for New Zealand.
“Our analysis will include consideration of changes to the regulatory environment, to consumer needs and expectations and to government priorities. This understanding will help us to test and update the objectives of, and rationale for, government intervention in this area. Current regulatory settings will then be considered in light of this intervention logic in order to identify key issues for consideration,” MBIE said.
Barry Read, of compliance firm IDS, said the terms of reference and the scope of the review were wide enough that the most common issues that popped up would have the opportunity to be analysed and assessed. He said he also liked the idea that MBIE would be updating their understanding of the role of regulation in the sector.
Adviser Murray Weatherston said the terms of reference were unsurprising.
But he said MBIE’s intention to seek to understand the rationale for government intervention had sparked a hallelujah refrain as he read the terms of reference.
“I have to be personally very pleased that they want to assess the objectives and rationale for regulatory intervention. I’ve said several times I don’t think they’ve figured out what the problem is they’re trying to fix.”
He said occupational licensing, as required for AFAs, was the most stringent form of government regulation, but it had never been made clear what it was intended to solve. “I guess, on that basis, I have to give the terms of reference a big tick.”
IFA chief executive Fred Dodds said the terms of reference were always going to be high level. But he said the Ministry has impressed the industry so far with its engagement. It has held meetings with professional associations and visited adviser businesses.
He said advisers needed to be encouraged to participate in the review on an individual level, not just via their associations. “Don’t just sit back, read the legislation and make comments. Think from a consumer’s perspective, not just advisers.”
Advisers would want to see issues addressed such as how the sector could be promoted when professional associations did not have the funds to do so, public understanding of the different types of adviser, adviser qualifications and the cost of regulation, he said.
IFA research showed it cost between $15,000 and $20,000 a year to keep up with the regulatory requirements of being an AFA. Dodds said there was a lot of duplication, such as advisers being asked to provide similar information in their annual information return, AML/CFT return and ABS.
Read said he hoped that once the review was complete and any necessary changes made, that could be the end of regulatory upheaval for the time being. “It would be nice to think it would then be working well and we can get on with business.”
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