Reading through the 167 submissions made on the Options Paper shows there is a clear division within the industry around advice. On one side there is the camp which wants to see a clear split between advice and sales, on the other side are the banks.
This probably comes as little surprise, but seeing it so clearly means that officials will have a very difficult process coming up with a solution to the various issues around advice.
Unfortunately the split we are seeing harks back to what happened when the Financial Advisers Act was originally written. The big end of town fought what could be called a rear-guard action which resulted in the creation of that awful QFE category. As one chief executive at the time said to me, they needed some sort of structure to house many of their advisers who wouldn't come up to the standards being proposed.
Under the regime the FMA essentially delegates its monitoring role to the company, and it is up to the company to police its sales people.
Officials at MBIE now have the challenging task of wading through all these submissions, along with its other research, to come up with a set of proposed changes. No doubt they are well underway with this process, but they are also under some pressure as the paper is due to be delivered to the minister by July 1.
If there is one wish for this review it is that officials consider submissions based on merit rather than being swayed by the size and power of the organisation making comment.
One of my observations is that the big end of town have well-resourced "regulatory departments" which present comprehensive and details submissions. This is in stark contrast to some submissions from individual advisers. It's important that MBIE officials aren't swayed by these differences as often the adviser working at the coal-face in an SME provides very important feedback on how things are working, compared to those in corporate head offices in Auckland.
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