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FSLAB consultation 'waste of time'

Consultation on the Financial Services Legislation Amendment Bill has been labelled a sham by one industry commentator.

Thursday, August 2nd 2018, 5:59AM 1 Comment

by Susan Edmunds

The select committee reported back on the bill this week, recommending it be passed with amendments.

But some industry commentators, including Financial Advice NZ chief executive Katrina Shanks, said it missed an opportunity to clearly demarcate the difference between sales and advice.

Consultant David Whyte, who has previously held management roles in AIA and AIG, said consultation had been a waste of time, effort and money.

“The Select Committee never had any intention of considering the serious issues raised in the submissions presented.”

He said, while more than 30% of submissions asked for a clear line between sales and advice, and between product provider salespeople and independent advisers, the committee had chosen to ignore that conflict of interest.

“The failure to address this issue creates a fundamental disadvantage for consumers. The Select Committee recognises that advice can be provided by an individual who has access to only one single product.

“In one brief statement, the financial services industry is both ‘dumbed down’ and catapulted back to the last century when tied agents dominated the distribution scene.”

He said FSLAB would allow pushing a product on behalf of an employer to be called advice.

“[It] consigns the Certified Financial Planner to the same level as the spotty-faced bank clerk who has NCEA as a qualification. The pathway to the much-criticised concepts of ‘product advice’ and ‘in aggregate’ compliance is now wide open for the CWG to include in the Code of Conduct. This will be the nail in the coffin of consumers’ ability to identify clearly and unequivocally on whose behalf a financial intermediary is acting.”

The changes recommended tightening the scope of nominated representatives working for financial advice providers, but did not tackle the key question of separation.

The committee recommended that non-QFE groups also be allowed to engage nominated representatives while they had a transitional licence. Previously, this had been restricted only to existing QFEs. The committee said this would allow providers to keep offering equivalent advice while subjecting them to the conduct and care duties of the new regime.

Tags: FSLAB

« Fund manager research: Where to from here?CWG: Code change not major overhaul »

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Comments from our readers

On 3 August 2018 at 12:38 pm Eyeinthesky said:
"He said FSLAB would allow pushing a product on behalf of an employer to be called advice."

Agreed.
It should be blatantly obvious to all concerned that there has been little value in any of the 'consultation' processes along the way, not with just FSLAB but the whole shooting match.

There has clearly been an agenda, driven by and controlled by those with the greatest vested interests.

Government has simply become a pawn in the game, with a revolving door policy involving the regulator and the banks.
Government is so caught in subservience to those interests, that it has lost it's way.

Government has become a tool of corporatocracy, but the reality is, that has probably been the case for a long time..

The regulation of financial advice in this country has done little to benefit the consumer.

We need a Royal Commission of Enquiry. Those with the most to potentially lose are the loudest opponents.

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
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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 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
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ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
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Sovereign 5.90 4.45 4.69 4.89
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Westpac - Offset 5.95 - - -
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Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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