More financial advisers not necessarily best result: Goldsmith

The Commerce Minister says he is mindful of the cost imposed on financial advisers every time regulation changes.

Tuesday, June 9th 2015, 6:00AM

by Susan Edmunds

Paul Goldsmith spoke at the Financial Services Council’s Future of Financial Advice launch breakfast seminar on Friday, about the Financial Advisers Act Review.

He told attendees he did not want to leave the impression that there would be wholesale change on every aspect of the Financial Advisers Act that was touched on in the recent issues paper.

Goldsmith said the Financial Advisers Act was part of an overall effort to improve New Zealanders’ financial capability. “It’s fundamentally important for NZ as a whole that we build confidence in financial market.”

He said it was important to remain conscious that regulatory change was expensive. “You don’t create an environment of confidence if you’re constantly chopping and changing. There has to be a reasonable threshold before making substantial changes.”

But he said a debate had to be had on whether the current Financial Advisers Act had got it right.

“Do New Zealanders actually understand the complexity of the regulatory framework we have? I don’t think too many people know the difference between an authorised and a registered financial adviser yet the differences are very substantial.”

There were also questions about sales activity versus advice and commission, he said.

“Have we got that right? Sometimes the regulatory outcome is not quite what you expect. Has the net result of regulation been that people with funds of relatively modest proportions are struggling to get access to financial advice? On the face of it, it does seem to be the case.”

Compliance costs were also significant and consumers would pay for that, he said.

After feedback on the issue paper, a proposal would be produced outlining planned changes.

The goal was to improve the level of competence in the system and to make financial advice available to as many people as possible. “A good robust system everyone can be confident about.”

He said the industry would know it was making progress when confidence in the markets increased.

“In the financial adviser space would be too crude to say more financial advisers then that’s necessarily a good thing. It’s not automatically the case. For New Zealanders to have access to effective financial advice more often would be the better outcome… an effective regime where people can have access to financial advice that is robust and can inspire confidence that would be the result I’m looking for.”

Tags: Financial Advisers Act