by Susan Edmunds
Michael Dowling
The presidents of the PAA and IFA addressed members at their combined conference last week.
IFA president Michael Dowling said the Financial Markets Authority had indicated that the establishment of Financial Advice NZ could be a step towards the regulator putting more faith in the financial advice industry.
“We’ve said is there a chance for us to be co- or self-regulating,” Dowling said. “We have to walk the talk first.”
IFA chief executive Fred Dodds said it was something he had brought up in early conversations with the FMA.
"I asked that question of Rob Everett - if we get this right, would there be any chance of us being self-regulating?"
He said the message was that it was something that would be considered, if it was possible to prove that Financial Advice NZ was going to be a success, if advisers were joining it for the right reasons and it was making a significant contribution.
"That's up to us to prove that we can make it work," he said.
A good professional body would have to have authority, independence, work in the public interest, rigour to ensure its advisers were interested in keeping up with CPD and aspiring to higher qualifications, and should have teeth to deal with advisers who stepped out of line, Dodds said.
"If we have a truly working professional body it ideally would be respected by the regulator and start paying some regulatory role but that's down the track. They're not going to give carte blanche to Financial Advice NZ just because we think it's a good idea."
As more advisers came under more intense scrutiny after the Financial Advisers Act review, regulating them would become a much bigger job, he said.
But a challenge would be getting the support of advisers who were not currently a member of any association, he said.
Liam Mason, FMA's director of regulation said the current review of the Financial Advisers Act did not contemplate adviser self-regulation.
"We do see a role for industry bodies in working to support the objectives of the review - to raise standards and improve customer outcomes across the whole industry, and the FMA will work closely with industry bodies to achieve this," he said.
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I would have thought the new Associations major objective would be to represent the interests of it's dues paying members. Not so according to the new Associations spokespersons they want to be gate keepers and have the power and regulatory teeth to deal with errant Advisers.
The FMA struggles to cover the expense of keeping industry participants in line and in most cases reaches out of court settlements due to the exorbitant expense of proving culpability via the High Court. Don't see how Financial Advice NZ could do this any better nor have the cash to splash around seeking court sanctioned penalties for errant Advisers.
I would humbly suggest Financial Advice NZ may get better traction from the Adviser fraternity if their primary objective was to be a truly representative organisation for the NZ Financial/Insurance/Mortgage/Lending Advice participants.