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NZFSG rolls out its FAP

NZ Financial Services Group is inviting all its members to join its FAP and has released pricing to the market.

Wednesday, March 25th 2020, 6:25AM 2 Comments

Brian Greer

Loan Market chief executive Brian Greer says the new regulations "are the single biggest thing that has ever happened for us in the industry".

He told delegates at the recent roadshow it was an opportunity to put "distance between us and the competitors".

NZFSG has a transitional licence and has invited all of its 1,100 members to apply to come under its FAP.

Greer says advisers can have their own FAP. 

The key to the group's FAP is that advisers will need to use NZFSG's MyCRM software which has been upgraded to a new version.

This will allow the group to monitor advice given by advisers under its FAP.

Greer says the group will probably not allow advisers to use different CRMs.

"You are either pregnant or not pregnant," he says. But he did leave the door open: "Talk to us."

Under the audit process NZFSG plans to use a traffic light system. Green means an adviser is all good for six months; amber means there will be some areas of advice which need fixing and the review period is three months. If an adviser turns up red there are problems and if they are not fixed they won't be able to stay in the FAP.

Greer was at pains to point out the audit process "is nothing to be scared of".

He says the group has to be running the audits as it is taking on the liability of the advice: "We, the NZFSG directors, are in the gun."

Greer says under the FAP advisers will be charged $300 plus GST a month for audit and compliance, on top of their existing fees.

Advisers will need their own websites, they need to complete level five financial planning papers and they still need to belong to an external disputes resolution scheme. 




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Comments from our readers

On 25 March 2020 at 12:52 pm valkyrie6 said:
Adviser licensing checklist - Should I elect to work under a dealer group FAP?

Australian owned dealer group – NO thanks

Compulsory use of this group’s CRM with my customer’s personal data been held in Australia now by their real estate company owners - NO thanks

Dealer group has its own mortgage arm (Loan Market) which competes directly against me for new mortgages – NO thanks

Future override commission earned on new insurance policies will still go to the dealer group FAP even though my business is giving the advice to customers – NO thanks

Conclusion – I should listen to what other advisers are telling me and become my own FAP thus keeping my options open for the future!
On 25 March 2020 at 4:58 pm Amused said:
Hard to see the logic in electing to work under a dealer group FAP especially given the recent announcement made by Partners Life around payment of the override commissions. Speaking to several advisers this week the consensus seems to be that those who had only been thinking about becoming their own FAP will now be going down this path.

Aside from the fact that advisers do all the heavy lifting been forced by a dealer group to place all your customers personal and financial information into a third-party group owned CRM is highly questionable. Independent and privacy compliant CRMs e.g. Trail CRM are the future for all advisers operating in a licenced industry. The additional privacy requirements to be introduced in New Zealand soon make that fact abundantly clear. Any dealer group making use of their own CRM mandatory now to operate under their dealer group licence seems like an obvious attempt to cement membership numbers. Groups can argue about them having to be able to audit their members going forward under licensing but again this brings us back to the wisdom of allowing dealer groups to even qualify as a FAP. Licensing of the financial services industry was never designed with dealer groups in mind. A dealer group does NOT give advice to your customer, YOU the adviser do. Licensing is supposed to be about holding to account the individual giving the advice. That can never be applied to a dealer group without significant consequences to the adviser and his or her business. Essentially you will end up becoming a quasi-employee of the dealer group.

To be blunt this all revolves again around one key issue for the industry. The override payments currently been paid to the dealer groups by the insurers. Most dealer groups don’t share these override payments with their members and these groups have now become completely dependent on them. Put simply these dealer group business models are not sustainable. If dealer groups lose access to the overrides members are going to see their existing levies and monthly costs escalate substantially.

As I have said previously in terms of future disclosure of commissions been paid it’s a much easier conversation to have with a customer when advisers are their own FAP instead of trying to explain why a dealer group, whom the customer doesn’t meet or deal with directly, is receiving additional renumeration to the adviser sitting in their living room.

For advisers the benefits of becoming their own independent FAP are clear.

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AIA 4.55 2.55 2.69 2.79
ANZ 4.44 ▼2.89 3.25 3.39
ANZ Special - ▼2.29 2.69 2.79
ASB Bank 4.45 ▼2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - ▼2.29 ▼2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼2.89 ▼3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.45 2.65
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 ▼3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 ▼2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.99 3.09 3.15
SBS Bank Special - 2.49 2.59 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.69 2.79
The Co-operative Bank - Standard 4.40 2.99 3.19 3.29
TSB Bank 5.34 ▼3.09 3.29 3.59
TSB Special 4.54 ▼2.29 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 2.29 2.69 2.79
Median 4.54 2.89 2.99 2.97

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