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PAA: Draft bill essentially 'demoting the AFAs'

It is wrong that the majority of participants in the financial services sector do not need any level of qualification but can still be called a financial adviser, the PAA says.

Tuesday, April 4th 2017, 6:00AM 3 Comments

by Susan Edmunds

The association made a submission on the draft Financial Services Legislation Amendment Bill.

The bill is set to create a more level playing field for advisers than the current AFA, RFA and QFE designations – although competence requirements will be determined by a code of conduct that will be tailored to different types of advice.

In its submission, the PAA said there was a risk of alienating the already too-few AFAs with the proposed changes.

“By aligning all AFAs and RFAs into one single term – financial advisers -  you are essentially demoting the AFAs to the level of the RFA.

“All of a sudden there is no differentiation between those that have (at least) level 5 qualifications and those that have (potentially) none. We think a lot of AFAs will be very displeased and may well opt to become a financial product representative in the future. This will not be good for New Zealand.

"Therefore, there needs to be naming allowance over and above financial adviser to differentiate and highlight those advisers that are qualified over those that are not. We are not against naming everyone a financial adviser but there does need to be differentiation.”

Chief executive Rod Severn said advisers' competence, knowledge and skill should be determined by a properly moderated and resourced industry-led training programme, leading to large-scale completion of an industry standard qualification.

“It is wrong that the majority of participants in the financial services sector do not need any level of qualification but still be called a financial adviser. This does not help public confidence.

“A largely unqualified workforce only creates problems in the future. Attaining an industry standard qualification also allows portability across the industry and well as standardisation. Allowing product providers to pick and choose in-house training regimes that reflect their internal needs and aspirations as opposed to the industry and public's needs and requirements, will not add to the low esteem advisers are regarded in today. All new advisers commencing a career must do level 5 or equivalent.”

But he said work-based assessment was acceptable as part of the transition for existing advisers.

The PAA has been scathing about the proposed new "financial advice representative" category and said "financial product representative" would be better.

But it said, whatever they were called, it was not right that they were not individually responsible for conduct and disclosure, as others in the industry would have to be.

Tags: Financial Advisers Act Financial Markets Conduct Act PAA

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Comments from our readers

On 4 April 2017 at 2:13 pm AFA Muggins said:
From the FMA website "Promoting fair, efficient and transparent financial markets"

So, how transparent will it be in the future as to who is giving 'advice'.

Wonder if the FMA/Banking Co-Op made a submission on this............ ha, ha, ha.
On 4 April 2017 at 4:46 pm Murray Weatherston said:
Surely the headline is right IFF (if and only if) under the 2018 Code, existing advisers who are not AFAs at the start of the transition period (Feb 2019) are not required to do level 5 (or have designated alternative qualifications) in order to retain the right to be a "financial adviser" after the end of the safe harbour period?
How does anyone know today what the yet to be appointed Code Working Group will decree?
If anyone is that gifted as a soothsayer, can they also tell me what level the sharemarket will be at cob 30 June 2017!
On 9 April 2017 at 9:59 pm donbrown said:
Warning to all NZ AFAs enjoy the moment with the very few restrictions that you have to operate, in Australia we have been through the ringer with compliance and training and best interest duties for clients on Risk insurances,. Plus we have had our 1 year responsibility period for insurance extended to 2 years with 60% claw back on total commission, so we are working for free if client cancels in second year.

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