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Some sense with regulation

Recent discussion papers show "sense is prevailing" says Jon-Paul Hale. 

Monday, July 27th 2020, 2:11PM

I was asked several times a few weeks ago when I thought we would see the full licensing requirements. My answer was next July when transitional licensing is all sorted.

Why did I say this? Because I had no idea, and given the recent events this year, frankly, no one knows anything about anything they can be sure of.

Also too, the regulation focus has been about getting everyone on the playing field under transitional licensing, that’s bad enough without adding the rest right now.

However, it seems I may have had the month close but the year out. We have a couple of discussion papers floating around, and it seems some sense is prevailing.

I talked about the lobbying and advocation of industry bodies recently. It seems that a good part of the work done by Financial Advice NZ has filtered through on what we have in front of us.

And I quite like what I am seeing.

One of the themes you will have picked up in my comments has been the viability of independent financial advice in our space, and it looks like we are going to see something pragmatic for many of us.

I’ve not had a deep dive on this yet, but the multi-tiered approach is welcome as it applies a better risk matrix than one-rule-for-all, which is what we saw with the H&S legislation.

While this is still going to require a significant lift in practice operations, it does make the prospect of operating your own FAP a little less daunting than the scaremongering out there has indicated. Me included, but then I do risk, and that’s about what could happen.

When it goes better than planned, that’s a good thing.

However, as soon as you start to complicate things, licensing provisions take a significant step up in requirements. I’m still very wary of the many-advisers-under-one-FAP challenge.

A bank with 1,000 employees is quite different from 400 advisers in 400 separate businesses under the one licence. And that is where most of us sit if we don’t have our own FAP.

And this – my friends – is where the role of the dealer group is going to evolve and change, it has to.

We have seen the quite public changes and comments with Newpark Financial Services. Yup it’s disruptive change and things will break and other things will be made new.

What’s interesting is the multi-structured approach they are taking, which most of the others have in some shape or form too.

This is the evolution of the dealer group model where the offering is one of fee for service all the way through to advisers "employed" by the FAP and variations in between.

Is it going to work? Time will tell ... at the same time it is the pragmatic approach to the pressures of the market.

I’m quite interested to see this evolution play out, as we are going to need these support-service businesses into the future if we are to remain truly independent.

And no ... just because your dealer group hasn’t imploded doesn’t mean to say it won’t. More that everyone will have their moments in the sun when the pressures externally and internally force change.

It is also why dealer groups need our support right now as they face unprecedented changes too.

Advisers choosing independence in the market are the ones that will drive the provider change, they’re often considered to be a pain in the arse too.

That’s a label I’m OK with, especially if I can drive better outcomes for my clients.

What say you?

Tags: Jon-Paul Hale licensing new regime Opinion regulation

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ANZ 4.44 3.15 3.25 3.39
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ASB Bank 4.45 2.55 2.69 2.79
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China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
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First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
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HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
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HSBC Special - - - -
ICBC 3.69 ▼2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
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SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
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Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 21 September 2020 10:48am

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