They said, while there were no systemic issues, there were changes that were needed, including more investment in bank processes and checks to ensure customer interests were given priority over the long term.
Financial Advice NZ chief executive Katrina Shanks said the report was good for building public trust in the financial service sector.
The focus of the report on putting clients first was something that advisers should note, she said. “The whole sector is being sent clear messages that the client’s interests do need to come first.”
She said there were other points to pay attention to, such as the regulators’ focus on long-term care of clients.
“They need to take that on board when giving advice to look beyond the point of sale to the enduring relationship and make sure they are putting value into the process. Advisers do that well now.”
But she said, given the statements made about controls and processes needing improvement, the code working group might need to revisit some of its draft standards.
The code allows nominated representatives’ competence to be backfilled, for example, by a financial advice provider’s processes and systems.
“It will be interesting to see if they relook at that now the report has come out saying there are weaknesses in those processes now because code standard nine in particular relies on them to be good. Now the regulator has highlighted they have concerns about them.”
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