tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, July 18th, 6:26PM

News

rss
Latest Headlines

Australian rules an “impediment” to giving financial advice – report

Financial advisers in Australia have been told the regulations that control their work are complex, difficult to understand and difficult to comply with.

Tuesday, February 14th 2023, 6:09AM 5 Comments

by Eric Frykberg

And so a range of changes should be brought in to make the provision of advice easier and cheaper to do.

The comments came in a report called the Quality of Advice Review, which was released at the end of last week. It was done for the Federal Government by a Sydney finance lawyer Michelle Levy,

The review followed a similar report on the banking industry and it followed years of complaints that state regulation in Australia was needlessly complicated.

This view has an echo among New Zealand advisers.

In her report, Levy basically agreed with these complaints.

The regulatory framework had “serious defects,” she said.

“They are an undoubted impediment to consumers being able to access affordable financial advice. They are also an impediment to consumers accessing high quality advice. The regulatory framework has not even proved effective in preventing consumer harm,” Levy wrote.

She went on to say that regulations had accumulated with rapid succession over a short period of time in response to crises and scandals, she wrote.

The consequence was patchwork law – it was not coherent and was plainly not working.

Levy went on to defend the role that advisers play in helping consumers deal with banks, superannuation funds or insurance companies.

“The regulatory framework does not accommodate this well,” she wrote.

“It makes it hard for institutions to give their customers simple personal advice and it makes it hard and expensive for financial advisers to give their clients the advice they want at a price they are willing to pay.”

Levy's report said there were about 16,000 financial advisers in Australia, but that number was still too few to deal with a population of 25 million.

In her report, Levy made 13 sets of recommendations. They included amending the law to give more precise definitions of advice and to replace existing obligations on advisers with a true fiduciary duty to their clients. This would eliminate the “Safe Harbour” protection available for advisers who follow required procedures when they deal with a client.

Levy's inquiry heard complaints that existing Safe Harbour provisions encouraged advisers to follow an established process rather than carefully follow the specific needs of a client.

These changes would apply only to financial advisers.

Other sections of the report recommend more explicit rules for dealing with conflicts of interest and greater use of new technology by advisers.

During her inquiry, Levy heard the cost of providing advice could sometimes be greater than the sum of money earned from commissions.

Despite this, she did not favour increasing commissions. Instead, she suggested her proposed reforms to the way the industry is governed would make it cheaper and easier for advisers to do their job.

In summary, Levy said the regulatory framework should support the delivery of proper advice.

“The recommendations in this report will, if they are accepted, improve the accessibility and affordability of quality financial advice.

“They will encourage and make it easier for financial institutions to give advice to their customers and they will make it easier for financial advisers to tailor their advice to the needs of their clients.”

Tags: financial advisers

« Recommending products without expert research - new Code guidanceTough times ahead for NZ economy: Nikko economist »

Special Offers

Comments from our readers

On 14 February 2023 at 12:17 pm w k said:
let's see what our "cut and paste" experts who keep looking across the ditch has got to say. they don't listen to advisers, do they?

i strongly suggest, change the whole lot, starting from the chair. quote: it's insanity to have the same people and expecting different results each time.
On 15 February 2023 at 12:45 pm Ontheotherhand said:
The tragedy is that more than 30 advisers in Australia were driven to suicide. Let's hope that the FMA's new zeal does not lead to similar results in NZ.
On 16 February 2023 at 12:47 pm w k said:
@ontheotherhand: reading in between the lines "prosecute even if it's a lost case", could be trying to beat Australia's more than 30.
On 16 February 2023 at 4:29 pm JPHale said:
They're still bashing commissions, like W K said; same people different expectations... insanity!
On 17 February 2023 at 10:50 am Amused said:
Some damning comments from Michelle Levy about the impact of regulation in Australia. Many advisers here will recall the Trowbridge report in 2015 which was the catalyst for Australia setting out to change their industry’s commission structure and regulate advisers. The aftermath has been a mass exodus of advisers from the sector with consumers being left without access to advice.

As one NZ insurer head warned last year this is the risk that will play out in New Zealand as well now if we're not careful. Licensing has already made it hard for banks to give their customers simple personal advice. How on earth can this be helping achieve the good customer outcomes that the FMA says it wants?

Regulation of the financial services industry was supposed to be focused on the quality of advice been provided to the consumer. It started with good intentions but somewhere along the way the process quickly become hijacked by bureaucrats at the FMA and MBIE + compliance and education providers who are always quick to scaremonger advisers into paying for another course.

Regulation that is disadvantaging the consumer needs to be repealed. A change of Government at the next election will hopefully see this happen.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 ▼7.45 ▼7.09 ▼6.95
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼6.85 ▼6.49 ▼6.35
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

Last updated: 18 July 2024 10:19am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com