About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Wednesday, May 22nd, 9:22AM
Latest Headlines

FSLAB: Still changes to be made, associations argue

Financial adviser associations say there’s a risk the Financial Services Legislation Amendment Bill is a step back for professionalisation of the industry.

Monday, February 26th 2018, 6:00AM 4 Comments

by Susan Edmunds

Submissions to the Economic Development, Science and Innovation select committee, which is considering the bill, closed on Friday.

The Financial Advisers Act review process afforded stakeholders many opportunities to engage with those crafting FSLAB, which MBIE had indicated might expedite the passage of the new law.

But those with concerns were still encouraged to submit – and among them were Financial Advice NZ, the Stakeholders Engagement Group, which is made up of adviser bodies, and SiFA.

Their submissions had common themes: Concerns about the delineation of sales versus advice, the exemptions that allow financial advice to be given outside the regime, and a worry that the new “level playing field” for all advisers could mean the existing regime for AFAs is dumbed down.

“We are concerned that the progress made in lifting professional standards when regulation was originally introduced (via the AFA model) could be undone by lowering standards across the board in an effort to level the playing field,” Financial Advice NZ said in its submission.

“We see a likely ‘de-professionalising’ of the industry in the reference to a level playing field, which could mean we end up with the standard being set at the lowest common denominator which in this case would be nominated representatives.”

It also argued the demarcation of sales versus advice, a key point of discussion through the review, had not been adequately reflected.

Anyone offering advice under the new regime will be a financial adviser or a nominated representative. Both designations will have to work for a financial advice provider.

The Stakeholders Engagement Group, which includes IFA, PAA, NZFAA, The Association, SiFA and IBANZ, said nominated representatives would often just be salespeople.

“Our view is that a sale occurs when a person solely offers a product or products manufactured by their employer with no alternatives considered. In the interests of consumer clarity and understanding, such a person should be referred to as a 'product sales' person.

"A salesperson is not providing advice. Clients mistakenly believe that salespeople are advising them.”

SiFA agreed: “We have said it before and we repeat it again here today, the vertically integrated organisations have completely captured the officials and the regulators; the officials have put before you the select committee in this bill almost everything the VIOs could have dreamed for. The VIOs did not want a separation of sales and advice, because of the likely detrimental effect on their businesses – and they have been simply handed what they wanted.”

Financial Advice NZ said consumers would understand the designation no better than they did the RFA/AFA system.

The groups argued that the exemption for lawyers and accountants should not be allowed to continue in its current form.

SiFA took issue with the exemption for journalists, too, saying that some were drifting into writing personal advice columns. They should not be able to offer the advice themselves, the group argued.

Financial Advice NZ said the entity licensing model could cause problems.

“In the current environment, a large number of advisers - both AFAs and RFAs – operate in sole practice or in small firms. They are currently operating efficiently but are concerned by the uncertainty around the new regime and its impact on, and costs for, them.

“A move to a regime in which advisers operating in large firms are effectively (because of capability and cost constraints) preferred over small operators is sub-optimal. It will, in our view, result in a significant number of existing advisers leaving the profession and so negatively impact on the Review’s objective of providing the public with access to the advice and assistance they need.”

SiFA said advisers had spent more than $100 million complying with the previous model. Now they would have to start again.

Financial Advice NZ pointed out that the industry was still waiting for information from the Financial Markets Authority on what licensing would look like, from MBIE for disclosure details and the Code Working Group for competency information


Tags: Financial Advice New Zealand Financial Services Legislation Amendment Bill IFA Professional Advisers Associations

« Getting to Know: Tim FairbrotherApril launch planned for Pie Wealth »

Special Offers

Comments from our readers

On 26 February 2018 at 10:02 am retired blogger said:
Great work by all the above submitters

right on the money

well done everyone

On 26 February 2018 at 4:53 pm Murray Weatherston said:
I hope readers might be interested to see a full listing of the nine specific matters SIFA submitted on. Herewith potted summaries of the nine and we would be happy to elaborate to anyone who shows more interest.

Three fundamental flaws
1. No distinction between sales and advice
2. De-professionalisation of advisers
3. Unwarranted exemptions for lawyers and accountants, advice-dispensing journalists and direct investment property

Specific drafting issues
4.No casting vote Code Committee chair
5 Code Committee prohibited from adding new adviser duties into the Code
6. Redraft the relevant section so it is clear the Code is for any person who provides financial advice (more like an occupational code for humans and perhaps a separate code for robo-advice)) rather than the service Code CWG think the existing wording requires.
7. Make clear whether a “financial adviser” can provide advice on behalf of more than one financial advice provider or not
8 Expand definition of financial advice to include a personal insurance planning service, a mortgage planning service, a general insurance planning service etc and not just an investment planning service
9 Clarify the boundary as to how much discretion a “nominated representative” can have before they can no longer be a nominated representative and would have to be a “financial adviser.”

Murray Weatherston
SIFA Chair
On 27 February 2018 at 3:18 pm Bruce Cortesi said:
Some good comments raised in the article, and Murray - good points you have raised in your submission - good job.
On 27 February 2018 at 5:47 pm NormanStacey said:
All pertinent and important points. "Advice" seems increasingly captured by VIO's, which stifles innovation.
Well done Murray & SiFA - we just hope the Select Committee is more receptive than the bureaucrats.

Sign In to add your comment



Printable version  


Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.69 4.39 4.45 4.55
ANZ Special - 3.89 3.95 4.05
ASB Bank 5.70 4.45 4.39 4.55
ASB Bank Special - 3.95 3.89 4.05
BNZ - Classic - 3.89 3.95 ▼3.89
BNZ - Mortgage One 6.40 - - -
BNZ - Rapid Repay 5.85 - - -
BNZ - Std, FlyBuys 5.80 4.69 4.59 4.79
BNZ - TotalMoney 5.80 - - -
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.49 4.45
HSBC Premier 5.89 3.99 3.99 4.39
HSBC Premier LVR > 80% - - - -
HSBC Special - 3.69 3.69 3.95
Lender Flt 1yr 2yr 3yr
ICBC 5.79 3.95 3.99 3.95
Kiwibank 5.80 4.80 4.94 4.84
Kiwibank - Capped - - - -
Kiwibank - Offset 5.65 - - -
Kiwibank Special - 4.05 3.99 4.09
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 ▼4.89 ▼4.99 -
Resimac 5.30 4.86 4.46 4.69
RESIMAC Special - - - -
SBS Bank 5.79 4.85 5.05 5.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 3.99 3.99 3.99
Sovereign 5.80 4.45 4.39 4.55
Sovereign Special - 3.95 3.89 4.05
The Co-operative Bank - Owner Occ 5.65 3.99 3.99 4.15
The Co-operative Bank - Standard 5.65 4.49 4.49 4.65
TSB Bank 5.69 4.55 4.49 4.65
TSB Special - 4.05 3.99 4.15
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.79 4.69 4.79 5.19
Westpac - Offset 5.79 - - -
Westpac Special - 3.89 3.95 3.95
Median 5.80 4.45 4.42 4.42

Last updated: 20 May 2019 9:09am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%


About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
Site by Web Developer and eyelovedesign.com