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My wildly unhelpful prediction …

I said to a colleague about two months ago that based on the 2010 change, 90% of advisers will miss the June 2020 deadline. They disagreed – they may well be right – I hope they are.

Thursday, December 12th 2019, 1:16PM

by Jon-Paul Hale

Their view was significantly less than expected would register as FAPs and while missing the deadline, would find a home with a FAP in the 90-day grace period for FA's after that.

However, the first week of licensing isn't filling me with confidence.

First off, for a bunch of people that are supposed to be risk managers, we're demonstrating to the regulators and Government we don't have a clue what we are doing.

I wrote, a couple of articles ago, about not registering as a FAP as yourself, do it through a company. This registration option was added to FSLAA to align with NZ law and was never intended to be used ... It purposely wasn't in the first draft of FSLAB.

Yet here we are with the first week of licensing, and nine of the 23 licences issued are for individuals as FAPs …

I was talking to a lawyer about this yesterday, and while they get the trading risk aspect, which a director in a company would have anyway, it wasn't until I asked the question about retiring that the light came on.

So when you retire, how are you going to transfer your licence?

Sure you can sell and transfer the clients, but you can't sell/transfer the licence. The licence stays with the registered entity, the individual.

I'll say that again; the licence stays with the registered entity ... ie you, the person creeping around with your zimmer frame at 96, are still liable for the advice.

Now for some, they won't be too concerned about that, but they should be, as this stuff can come back to haunt you.

If the adviser business you sell your clients to doesn't pick up the advice relationship with those clients, the risk of your advice never gets mitigated. And there are thousands of clients out there that never respond to service prompts, especially after they have been "sold".

I have one case, where for the last two years a good adviser, outside Auckland who has been trying and failed to engage with a client for client requested service, has asked us to follow up locally. There have been numerous attempts. There has been an acknowledgement from the client to the insurer that they have heard from us and are happy with us to contact them. Yet we haven't actually connected. No response to letters, emails or phone calls. No callbacks or messages. Nothing.

Under the new rules, this client, until we do make contact and discuss terms of service, remains a responsibility for the existing adviser. Regardless of the "sale", the advice contract is with the FAP, until the client changes it.

So those that are registering as individual FAPs to save $300 in not registering your company spend the money and don't be a numpty. You will have to pay the additional FSP fee for the company at the time; however, this is able to be refunded on request.

My other prediction. Those registering as individual FAPs have just put themselves on the "numpty list" with the FMA and can expect a visit in due course.

However, that rant aside, my point for the headline is I am hearing plenty of comment that suggests advisers are still not listening. I really mean they are not paying any attention.

The feedback from this group is "we'll wait and see what happens" as in they are considering that the present noise is just noise and nothing will change. Hmm ... interesting position given that the law has changed and the FMA has had its litigation budget increased fourfold.

The follow-up comment to this is there will be so many that won't license that they won't pursue this. Ummm, no they are very serious about this. Past action by the FMA, MBIE, and the Companies Office suggests this is thinking akin to anti-vax and flat-earthers: misguided, purposeful ignorance.

Not to mention the issue with providers, they won't allow an adviser to continue without the appropriate licensing as their own licence as an insurer will be put at risk.

This is also the group of advisers that never turn up to training or roadshows and expect the companies to pander to their whims. Newsflash, it is all about to change!

Frankly, after all that has been said and done, I have three words for this group: "Goodbye, good riddance". These are the advisers who may be good advisers but are not doing the right things to ensure our industry develops as a profession.

They are also the people that have driven the Government and regulators to take the action they have with the legislation we now have to work through.

Harsh maybe but at the same time the New Zealand public needs to be confident that they are getting the right advice for the right reasons.

I am an adviser because I got sick of the rubbish I was seeing and I'm doing something directly about it. I also make no apologies for this.

There is a level of myopic arrogance in the industry that is about to have a significant wake-up call. And yes, I've been accused of this in the past with my views about the changes coming; with the fullness of time, my sometimes mistaken – not often wrong – approach has been vindicated.

So not arrogance, more informed and educated confidence. It is seen as arrogance by those that don't like the message. Something as a society we seem to be significantly missing – informed and educated that is. See flat-earther and anti-vaxer for more evidence of this.

Time to get with the programme people. The light at the end of the tunnel is a freight train with your name on it; it's time to make a decision, get on board or get run over – your choice.

Whether you think you can or you think you can't you're absolutely right. Good luck with your choice!

Tags: FAP Financial Services Legislation Amendment Act Financial Services Legislation Amendment Bill Jon-Paul Hale licensing Opinion

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AIA - Back My Build 5.94 - - -
AIA - Go Home Loans 8.49 ▼6.19 ▼5.69 ▼5.69
ANZ ▼7.89 ▼6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼5.99 5.69 5.69
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BNZ - Classic - ▼5.99 ▼5.69 ▼5.69
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BNZ - Mortgage One ▼7.94 - - -
BNZ - Rapid Repay ▼7.94 - - -
BNZ - Std ▼7.94 ▼5.99 ▼5.69 ▼5.69
BNZ - TotalMoney ▼7.94 - - -
CFML 321 Loans 6.70 - - -
CFML Home Loans 6.95 - - -
CFML Prime Loans 8.75 - - -
CFML Standard Loans 9.70 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.99 - -
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Co-operative Bank - Owner Occ ▼7.65 6.19 5.75 5.69
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First Credit Union Special - ▼6.40 6.10 -
First Credit Union Standard 8.50 ▼7.00 6.70 -
Heartland Bank - Online ▼7.49 ▼5.99 ▼5.59 ▼5.69
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 6.15 5.69 5.69
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
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Kiwibank ▼7.75 ▼7.09 ▼6.59 ▼6.49
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Kiwibank Special 7.75 ▼6.19 ▼5.69 ▼5.69
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Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.49 6.95 6.29 6.29
SBS Bank Special - 6.35 5.69 5.69
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SBS FirstHome Combo 5.94 5.45 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
TSB Bank ▼8.69 ▼6.79 ▼6.49 ▼6.49
TSB Special ▼7.89 ▼5.99 ▼5.69 ▼5.69
Unity 8.64 6.29 5.79 -
Unity First Home Buyer special - 6.20 - -
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Westpac Special - 6.29 5.79 5.79
Median 8.29 6.32 5.89 5.69

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