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Lack of disciplinary action shows advisers performing

A lack of complaints and disciplinary action taken against financial advisers in New Zealand shows most are doing a sound job for their clients, the Institute of Financial Advisers says.

Friday, February 19th 2016, 6:00AM 2 Comments

by Susan Edmunds

It comes as British research revealed disciplinary moves had been taken against fewer than 1% of advisers there, despite widespread misselling claims and accusations of bad advice.

IFA chief executive Fred Dodds said the situation in New Zealand was different and the fact few advisers had felt the sharp end of regulatory action meant most were behaving appropriately.

The Financial Advisers Disciplinary Committee has dealt with just a handful of advisers since its inception.

External dispute resolution schemes also report relatively few complaints against their adviser members. IFSO said 2% of its 2015 complaints were against financial advisers and FDR said 6% of its cases were against advisers,  three against investment advisers, 11 against mortgage advisers and 12 against insurance advisers.

FDR said that was a small number considering that 80% of its members were advisers. All the complaints were resolved.

FSCL had more - just under 50 of the 193 cases it investigated in the 2015 year related to advisers.

Dodds said the relatively low number of complaints and the lack of disciplinary action against advisers seemed to indicate that New Zealand advisers were doing well for their clients and raised questions about why such extension legislation had been enacted to govern the sector.

"It resonates with what [adviser and former SiFA president] Murray Weatherston said, what is the problem regulation is looking to solve?" he said.

"Regulators are making AFAs jump hurdles, prove the industry is doing right by consumers, why have they had to go and do what they have to do, it seems they've been beaten to death by finance companies and David Ross but financial adviser operations are actually pretty effective."

 

 

Tags: compliance financial advisers

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Comments from our readers

On 21 February 2016 at 6:11 pm Dirty Harry said:
What it shows is the absolute folly of creating an answer to a question nobody asked. While ignoring the problems that genuinely needed a solution - and still do. When Lianne Dalziel kicked off the process that would lead to the FAA and a raft of other legislation including the formation of the FMA, the topic du jour was the massive losses being suffered by ordinary kiwis in finance company collapses.

The problems then were; -
- regulators asleep at the wheel
- finance companies taking a few too many liberties
- a public that was not interested in taking advice – from anyone

We know that most of the money lost was not 'advised'. We know that many advisers actually prevented losses by placing clients elsewhere. We know that advisers generally advocate for and work to genuinely add value for clients, and now we have a stronger track record than ever that this is the case. It was always the case.

The real crooks are the David Ross types. The Rod Petrecevics and Patrick Diacks and Tone and Denis Munros. And also the people whose business is to take advantage in so many ways of the public's money – including those who achieved colossal carve-outs to the FAA and other regulations.

Advisers were never the problem, and plenty of valid questions from 10 years ago still have not been answered.
On 22 February 2016 at 10:00 am Ron Flood said:
For those of us involved in consultations at the very early stages of regulation with Lianne Dalziel, the finance company debarcle was still 3-4 years away and did not play any part in the early stages of the process.

The initial intention at that time was to establish Authorised Professional Bodies (APB) and advisers required to belong to one.

The topic at that time was the fact that New Zealand was way behind international markets when it came to financial and adviser regulation and it was the Governments desire to strengthen our credibility in the world marketplace.

The finance company situation was just a 'speed hump' along the way and not the reason we now have regulations.


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