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[GRTV] Apathy still reigns amongst advisers

Finzo chief executive Nick Stewart worries about the lack of guidance on FAPs and suggests regulators should be taking a stronger line of the upcoming changes.

Wednesday, December 4th 2019, 9:13PM 4 Comments

Stewart, who runs adviser support group Finzo, reckons many advisers are sitting back on licensing because of continued uncertainty.

In particular he is wanting to see guidance notes from the Financial Markets Authority on what Financial Advice Providers (FAPs) need to do under the new laws.

“I think quite a few people are in a period of hiatus, ostrich-like, just waiting for these guidance notes.

“Hopefully they will arrive in February/March next year, and then I think firms will start to really ramp up their due diligence.”

While there has been a steady trickle of firms entering the transitional licensing framework, which started last week, many will sit back and wait until the last minute.

He describes it as being like the lead up to Y2K.

Stewart also cautions other groups about building their own CRMs saying it takes a lot of time and money to get it right.

When it comes to thorny issue of how much advisers will have to pay to belong to a FAP, Stewart is a little cautious.

One mortgage broker dealer group head suggested the annual cost would be around $21,000.

Stewart was reluctant to put a number on it, and noted that some forms of advice are easier and less risky than others.

Finzo looks after advisers doing pensions, KiwiSaver, wealth management and risk management, both personal and business. “It's a more complex animal,” he says.

Advisers also need to ask groups if the costs are bundled up or there are lots of individual costs like professional indemnity, auditing, CRMs etc.

Finzo has a couple of different offerings, he says. “One of them will be people utilise our FAP and become an authorised body.

“But the other is that we support firms to achieve their FAP. So in other words, they're using our building blocks, our compliance structures, our CRM engine platform, everything integrates through. That's why our little tagline is "integrated financial solutions" because we want things to work together.”

He says Finzo offers advisers “Independence. Family values. We’re a family owned firm, non-aligned. We're not for sale. A nice young team.”

Stewart says the FMA has taken a softly, softly approach so far but probably needs to toughen up its message: “The regulator needs to be, I think, stronger on what the responsibilities with FAP are.”


TO HEAR THE FULL INTERVIEW - Listen to the Podcast here

Full transcript of the interview available here.

Also available on SoundCloud.

Tags: FAP Financial Services Legislation Amendment Act Finzo GRTV

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Comments from our readers

On 5 December 2019 at 8:21 am JPHale said:
The bit that is being missed by all. The FMA is the regulator. They are not compliance consultants, specialist advisers or an industry association.

They are the police.

You don’t ask the police if you can do something, you either figure it out or get some advice. But the police are not the ones to give the advice.

They manage/regulate the fences. Much like in a game park, while your in the game park you follow their rules. If you start heading off the reservation they may say something, if it relates to their rules.

If you’re a human leaving a game park they won’t respond, if you’re an endangered animal, they’ll likely put a team on it.

Similar things can be said about DRS schemes too...
On 5 December 2019 at 12:37 pm Tash said:
And JP the police do not make the law! so your comparision is not really accurate.

When the police tell you how and where to put up your fence and even if you can put one up at all, then I think it reasonable those same police give guidance.
On 16 December 2019 at 5:00 pm JPHale said:
Tash, the FMA doesn't make the law either.

Talking about fences, the police being involved with an actual fence situation is when there is a dispute, the police may step in at that point, though most head off to their lawyers for that and then court.

You don't turn up to the police station and ask "Where can I build my fence?" that's a question for the local council.

My point, you don't go to the regulator for advice, you get the regulator when there is a problem that needs addressing.

MBIE advises the government on the law, after consulting with us, DRS, public, FMA, and anyone else they feel they need to consult.
They may even write the draft for the government too.

The Government then discusses it and, if it's being enacted, passes it.

Then it is up to the public to read and interpret it as best they can to comply. If they can't manage that, then they go to a lawyer or other associated professionals.

Sure, you can ask the questions of the regulator how they are going to approach regulation, but don't expect an answer, that's not their role.
On 17 December 2019 at 1:12 pm Tash said:
JP Hale. I agree what you say is how it should be!

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