1 Comment 1 CommentNicole MacFarlane, a special counsel at DLA Piper, said the reforms of the financial advice sector as a result of the Financial Services Legislation Amendment Act should improve the quality of financial advice provided to retail customers.
But she said they were likely to fall short on one stated aim: improving access to advice.
Financial capability had been identified as a significant factor in ensuring people had access to good quality advice, she said. The reforms did nothing to aid that.
Work on improving financial capability needed to start with children, she said.
“It’s good they are doing what they are doing now to improve the standard of advice,” she said. “But what is it going to do about access to advice when financial literacy is such a big factor in that. How are these reforms going to work towards improving financial literacy?”
She said the industry could not boost financial literacy by itself and would need Government support.
“Currently there are eight entities permitted to provide personalised advice through digital advice facilities. However to date very few of these facilities give truly personalised advice. Has the ability of such facilities to reach a wider audience been overstated? What else can be done to make advice more accessible?”
She said the Financial Markets Authority's move to require KiwiSaver providers to apply assumptions set out in the FMCA regulations to their online investment calculators would restrict people's ability to personalise those tools.
“Quite apart from the question of whether the amendment regulations can be extended to such calculators in this way, it must be asked how such restrictions benefit investors? Arguably it’s a backward step in the fight to improve financial literacy and encourage investors to seek good quality advice.”
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