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Kiwis need better financial advice, says new FMA boss

There is a “big gap” between the level of financial advice New Zealanders need and what they are getting, says the FMA’s new CEO, Samantha Barrass.

Tuesday, March 22nd 2022, 6:00AM 6 Comments

by Jenni McManus

Part of the problem is financial literacy – or the lack of it – and education is at the root of it. Barrass acknowledges she is still getting to grips with New Zealand’s education system but says the lack of financial literacy education in schools in many jurisdictions never ceases to disappoint her.

When Barrass was chief executive of the Financial Services Commission in Gibraltar, the commission partnered with the country’s education department to roll out financial literacy courses in primary and secondary schools. Along with educational institutions, there are also opportunities to tap into workplaces and community groups to boost financial literacy and get better outcomes, she says.

Barrass, who took up the role six weeks ago, says everyone over the age of 18 needs a financial adviser. “An education can get you part of the way, but we all need financial advice in the same way as we need a doctor or a dentist. And there’s a big gap, in my view, between the advice that people need and what’s actually happening in practice.”

Even university students needed to be thinking about how much they were going into debt and how that would impact on their ability to buy a home and have a family.

Financial matters should also be part of the breakfast-table conversation in the home, Barrass says, but concedes that probably isn’t happening. “I think it has to start in childhood.”
Barrass says her own parents stopped paying for her schoolbooks when she was about eight. Instead, they gave her pocket money in the expectation that it would cover her books, as well as sweet and the other things she wanted.

“It was a very early education for me in budgeting,” she says.  “When I look back, that really set me up for life in understanding the value of saving and investing.”

Describing herself as a “reasonably well-educated person who has been active in the financial markets all of my career”, Barrass says she doesn’t have the time to plan her own investment strategy.

She relies heavily on her financial adviser in the UK to help plan her investments in a way that provides for her children and household.

His advice is particularly valuable because it is objective, Barrass says. “Because of the regulatory regime in the UK, I know that the advice he is giving me is impartial as to the products I might end up buying, and that is of enormous value to me.”

An economist-turned-regulator, Barrass came to New Zealand as a child and attended university in Christchurch and in Wellington. She did a stint at the Reserve Bank in 1988 before heading to the UK where she became CEO of the UK’s Business Banking Resolution Service and CEO of Gibraltar’s Financial Services Commission. Barrass also held senior roles in various industry bodies such as the FCA (Financial Conduct Authority) in UK and the London Banking Association.

Tags: FMA Samantha Barrass

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Comments from our readers

On 22 March 2022 at 3:34 pm j foster said:
Nice sentiments but isn’t this scope creep and stepping into the remit of another government agency. If we have government agencies duplicating then it seems a waste of resources. The FMA already has enough on its plate without taking on the work of other departments.

The role around financial literacy sure sits with Mana Ahungarua / Retirement Commissioner.

They state their role as
“Leading and coordinating of the National Strategy for Financial Capability to improve the financial capability of New Zealanders of all ages”

So why does the FMA now thing this is their role as well?

I am confused
On 22 March 2022 at 4:19 pm Murray Weatherston said:
If her comments after only 6 weeks in the job her comments in this story have been quoted accurately, then the new FMA CEO's start is on a par with the first CEO Sean Hughes with his opening comments he was the new gunslinger sheriff come to town whose aim was to run all the many cowboys out of of town.
Hardly an auspicious start.
On 23 March 2022 at 8:07 am Backstage said:
Very interesting, again as Murray says, if she is quoted correctly. I would have loved an accountant to help me at 16 through 20... who pays?

Should the accountant have done this for free?

The other issue bringing it back to our industry, lets say after a lot of advice the student does not implement, or they implement a $25 pm Insurance plan.. lets say my business receives even$450 gross for that work.

I have lost money and under the new regulations all that work i did i could have done for a $1,500 per month situation, same amount of work and liability.

The problem is, someone has to pay for advice! Like most things in life, somewhere, somehow, someone pays!
On 23 March 2022 at 10:46 am Dirty Harry said:
I don't see a quote where Barrass actually says "Kiwis need better financial advice".

looks like a very poor title. What she actually is reported to be saying is more kiwis need access to, and encouragement to use, financial advice.
That I can get behind.

Whilst the FMA's about page says (among all the enforce the law stuff) "Provide independent information to help consumers make good investment and financial decisions..."

Te Ara Ahunga Ora says "Te Ara Ahunga Ora Retirement Commission aims to help New Zealanders to retire with confidence. Retiring with confidence means New Zealanders feel secure they’ll have resources to live and the know-how to make ends meet. "

I would like to go on record as supporting FMA's strategic partnership with, and support for the work of, the office of the Retirement Commissioner Te Ara Ahunga Ora.
Brilliant idea.
On 24 March 2022 at 4:16 pm Amused said:
Fact - Thanks to the extra regulations imposed on the financial services industry clients access to financial advice is worsening not improving. Providers such as banks are now scared to even get into a conversation with a customer that might constitute advice been offered. I honestly don’t know how this does anything other than disadvantage customers who in many cases are just looking for someone to give them some basic guidance.

Last week we saw the country’s biggest bank adopt a digital refix process for its home loan customers reducing their ability to seek independent financial advice. For good measure the same bank has also reduced the time customers now have to make an informed decision about refixing from 2 business days to a couple of hours only the same day it provides new rates.

If the new CEO of the Financial Markets’ Authority is really serious about improving New Zealander’s access to good financial advice she might want to reflect on the current direction the industry is heading and ask whether we haven’t got some of these changes horribly wrong.

The recent stuff up made my MBIE with the changes it recommended last year to the CCCFA should stand as a prime example.

On 25 March 2022 at 8:35 am valkyrie6 said:
Yes you have to wonder if this move by the biggest bank to offer new interest rates direct online with no negotiation and no advice given and to close out the adviser industry is just a financial commercial decision to make even more profit ,or to try and sever the mortgage adviser relationship down the track or both, either way the customers are now pressured into making an important decision with no time to do so and no independent advice given, this can be stressful and no doubt lead to big mistakes being made, welcome to the new regulated advice industry.

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