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Attestations, qualifications, and just general tick boxing

One of the goals of the new rules is to improve confidence in the market; another is to increase access to advice for the New Zealand consumer.

Friday, October 13th 2023, 9:14AM 10 Comments

by Jon-Paul Hale

It seems we're heading in the opposite direction with the admin crap that's crossed my desk in the last couple of months.

From Fidelity Life's attestation process that asked me to confirm what was already on my email signature four times!

Seriously?

To the latest one from AIA that has me shaking my head.

AIA requests uploading your Level 5 qualifications by the end of March 2024.

I also understand where there are larger businesses with a reasonable staff turnover, things can be very much like herding cats. But that's more the exception than the rule with most advice businesses.

But hang on a minute; managing qualifications and registration is the FMA and FSPR's job? They are the gatekeepers to be able to provide regulated financial advice.

The provider needs to satisfy themselves that the adviser can give advice. The provider's role is not to police the adviser being able to do that; that's the FMA's role.

To be fair, all of the others have asked about qualifications, too. But that has been do you have it; yes or no? And primarily by email, email it back, and they manage it.

So, what do we have to do to give regulated financial advice?

The basic requirements advisers have to have are:
* Be registered on the FSPR.
* Have a Disputes Resolution Scheme provider.
* Hold and maintain a suitable qualification as per the Financial Services Code.
* Operate under a Financial Advice Provider License (FAP).

Which all sit under the FMA's purview and are registered and managed on the FSPR by MBIE.

AIA is a bit different with their qualifications request, and I have provided feedback on it because it clearly has not been tested by anyone with the actual qualifications.

In my laugh-otherwise-you-cry approach to things for transparency, I merrily ran around their system and uploaded my RG146 Aussie qualification from 2010, which is acceptable learning for the code if you have done the appropriate CPD.
* I have done the CPD here all over Good Returns, and I've done a thing called Level 5 Life & Health on top.
* My Aussie qualification is valid under the current code.

That's what I have gone with. I didn't tell AIA about the CPD in the system submission; I want to see what they do with it after receiving different qualification responses.

AIA, BTW, a couple of paragraphs up, yeah, that. The CPD needed for it to be relevant and current ;)

I have to joke about this because it is bloody painful!

First, and AIA will likely have fixed this by the time you read this or attempt to meet their requirements, this is to highlight the level of crap those of us that are early adopters have to deal with and to help those that have their heads down and are wondering WTF is this about?

AIA, bless their hearts, used their Learning and Development platform for this. Which is a good thing; everyone has records and transparency.

The problem?

They made every option in the upload your qualifications module mandatory to get through it, as in every section asking for every qualification option.

Maybe test it next time AIA?

All jokes aside, there is an additional bit to this and one that we need to be mindful of.

While this is a case of AIA doing its bit about proving to the FMA that they have done the appropriate, over-the-top, due diligence, it opens the door to several challenges that AIA are potentially stepping over the line on which I'll bore you with in the next one ;)

Tags: Jon-Paul Hale

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Comments from our readers

On 13 October 2023 at 11:00 am Murray Weatherston said:
@JP
The reality is that the regulations as written are the minimum requirements. They apply to everyone.
But other entities like Fin Insts are quite within their rights if they add things over and above the minimum law - their legal advisers will be advising them not simpy to do the minimum because they are risk adverse.
If you want an example of another much more costly example - try AML. There is a single law. But the processes required by various parties often go way beyond the law as written. You need to see all the various rules law firms have for the ID certification for A + Is.
Each institution has their own whistle when overseeing what their counterparties do. But over and above that there is also the Regulator with a bigger whistle.
Government and officials have simply gone mad over red tape - not only fin services but everywhere.
On 13 October 2023 at 11:24 am jeff m said:
JP I align with the sentiments from MW

Advisers and insurers enter into a partnership with counterparty risk for both. Advisers trust insurers do do the right thing at key moments like claim time and insurers need to trust advisers. Related to this the regulator expects insurers to undertake appropriate checks.

So an insurer’s process to check advisers is related to the regulator’s rules but is seperate.

It is a bit like underwriting. The process is messy but it means the insurer gets a better pool and all customers underwritten benefit from this. If an insurer has processes to help weed out bad advisers it benefits all. Part of the processes can be messy but there is upside.

Sometime best to just go along with this and focus on matters that support clients.

On 13 October 2023 at 2:49 pm JPHale said:
@Murray, I don’t have a problem with a provider having additional quals for the provision of advice. AKA their requirements for the distribution of their products, in my field the providers' product accreditation.

That requirement, if it is required, for that provider comes under their engagement and communication. Which isn’t what’s going on with the situation that triggered this.

This is about the process and attestation of qualifications that meet the industry requirements outlined in the code.

All of the providers have had their challenges in this space as well, not to mention the FUD we have all had thrown at us about what is, or is not, acceptable qualifications.

I guess what underlines this is the continuing provider issue; lacking communication and sense testing before pushing the green button.

You say mad about red tape, yes! That’s my point here.
On 13 October 2023 at 7:52 pm Skeptical said:
I hate to bang on about your beloved CoFI.

But in addition to my comment on your article last week regarding authority documents, you can and should expect more of this.

As the perceived burden is placed on the providers, the evidentiary burden will fall to advisers. I know it might not seem that way, but I have reason to think that there have been several liberties given to advisers in the past that will now cease to exist. Preferential treatment for known quantities will no longer exist, even those who pen columns on GR will have to verify level 5 and CPD.

CoFI is a while a way still and at this point rather uncertain. However, the work always commences well before the due date.
On 14 October 2023 at 8:48 pm JPHale said:
@Skeptical no delusions here and I fully expect there's going to be a lot more box-ticking in the name of CoFI.

Plenty of job justification buried in there too.

More the point, we can be smarter with the box-ticking and eliminate the duplication and dumb assumptions we’ve started with, and will continue unless we pull it up and push back.

Also, some may need the FSPR to improve what and how they're reporting too.

Advice businesses of all sizes have enough to contend with already, smarter not harder is needed.

On 16 October 2023 at 10:23 am JPHale said:
@Skeptical, also not my beloved CoFI by a long long margin. However, the recent FMA prosecutions of the big end of town demonstrate exactly why we need CoFI.

In its present form, yes it's painful, but let's not step back and take the foot off now, as it'll be years before we get an alternative on the starting line again.

The faster and more effective, albeit more painful, approach is to modify what we have with more urgency. Then we get to the desired point quicker.
On 16 October 2023 at 2:50 pm Murray Weatherston said:
@JP
Your last response to Sceptical shows you are making the same mistake as officials have been doing for yoears.
You are generalising from a couple of specific cases.
Regulation should be introduced only when there is a more widespread or systemic issue, AND Regulation has been shown to be the best response in an efficency sense.
On 17 October 2023 at 7:42 am JPHale said:
@Murray the thing is, this isn't about a few isolated cases, they have applied to almost all of our key providers. Almost every one has had an issue, a court case, and a fine.

The reviews say no systemic issues while the prosecutions demonstrate significant systemic issues.

Not to mention the example after example that's been discussed here.

You can take a narrow lens and play the corporate issue by issue with blinders, or you can step back and look at the bigger picture and see that those individual issues make up a far larger picture.

This may not play out in your investment space right now, it's had a lens on it for a very long time and 2007-8 was that part of the industry’s mirror event. Mortgages at the same time with facing the reality of that part of the industry’s contribution to the problems.

General insurance had theirs with 2012 and Christchurch. Though operationally they have been implicated recently.

We’ve not had that yet with life insurance, it's coming but unlikely to be as dramatic as a financial crash.
On 17 October 2023 at 8:04 pm Skeptical said:
If every provider has had a court case and a fine - doesn't this indicate that the current system is punishing unfair behaviour already?

Since, as you indicate, we already have a system that already punishes bad actors. Why shouldn't we then make sure that any further regulation to the industry actually solves the problem. Rather than usher in legislation that includes sections such as 'incentive regulations' just because they've already started work on it already.
On 18 October 2023 at 2:54 pm JPHale said:
No argument on your point on incentives, though that's more a case of closing the gate after the horse has bolted. Industry moved on that already.

I don't think CoFI in its present form is right either, more the point throwing it out rather than changing it puts us back 10 years and means there's nothing for the conduct space.

What we have seen so far are issues under FMCA which don't address conduct in line with FSLAA, that's the point. The insurers need to be inline with the requirements on advisers

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