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: Tuesday, December 10th, 3:49PM

News

rss
Latest Headlines

KAN chair calls for financial advisers to be exempt from CoFi

David Seymour's Ministry for Regulation should exempt Class 1 and Class 2 financial advice providers (FAPs) from complying with the Financial Markets (Conduct of Institutions) Amendment Act 2022 (CoFi), according to consultant David Whyte.

Wednesday, October 16th 2024, 6:06AM 4 Comments

by Jenny Ruth

Class 1 FAPs are sole advisers while Class 2 providers are groups of advisers.

Whyte, who chairs the Kiwi Advice Network (KAN) and owns the DCW Management consultancy, says that only the financial product advisers should have to comply with CoFi.

Advisers already have “a clear fiduciary duty to represent their clients' interests” under other financial services legislation, such as the Financial Services Legislation Amendment Act, as well as their professional code of conduct, “which clearly states they have to put the client's interests above their own,” Whyte told GoodReturns.

Cofi is simply duplicating regulations advisers are already complying with, he says.

Writing in his The Laird Online newsletter, Whyte says the true measure of the success of Seymour's ministry will be “its ability to deliver tangible benefits to the business community, particularly the financial services industry, which has faced intense regulatory scrutiny for over a decade.”

He says it's “crucial to ensure that regulations are effective without being overly burdensome.”

Financial product providers, designated by the Financial Markets Authority (FMA) as Class 3 FAPs,  should be the only ones required to comply with Cofi.

“The Ministry for Regulation has a prime opportunity to demonstrate its commitment to reducing regulatory burden by addressing this issue,” The Laird Online says.

“Failure to do so would render it another layer of bureaucracy, undermining its intended purpose.”

Whyte envisages a nightmare scenario in which each individual product provider demands proof from advisers that they're complying with CoFi.

That could mean advisers having to provide such proof to 40 or 50 product providers, he says.

Alternatively, if the legislation remains as it is currently, Whyte would like the FMA to enable advisers to produce a single such document.

But it should actually be the other way around: advisers should be asking product providers to show that they're compliant, he says.

Tags: CoFI

« Retail investors seek relative safety in managed funds and ETFs[GRTV] Smart is launching four new ETFs »

Special Offers

Comments from our readers

On 16 October 2024 at 10:51 am Old MacDonald said:
Agree 100% David. we are already seeing numerous unnecessary requests from providers under current regs. Some even wanting to have advisers justify their advice.
On 16 October 2024 at 2:01 pm dcwhyte said:
Point of Order - my remarks in this article have nothing to do with my Chair position at KAN or any other client with which I am, or have ever been, involved.

The article on my website - www.thelaird.online - is an expression of my views, opinions, and perspectives as an independent commentator and observer of the NZ financial services industry, and should not have been attributed to me in relation to any client relationship I have.

Also, the reference to "40 or 50 product providers" is incorrect. This refers to the number of commercial agreements a large Class 2 FAP could potentially have under consideration.

Exempting Class 1 and 2 FAPs from CoFI is a view expressed by a number of interested parties, including myself, that presented to the online Select Committee meeting when CoFI was still at the discussion stages.

Hopefully, any ensuing conversation leads to a more sensible outcome for clients, advisers, and the industry as a whole.

The Laird
On 24 October 2024 at 11:33 am Allaboveboard said:
Interesting article here David however Class 1 and 2 FAPs are likely not required to apply for a CoFI licence. To quote the FMA "Any registered bank, licensed insurer, or licensed non-bank deposit taker in the business of providing one or more relevant services will need to hold a financial institution licence" which would naturally exclude most, if not all, Class 1 and 2 FAPs.

What will be interesting is how this plays out with any additional requirements placed on advisers by the providers in order for them to meet their CoFI obligations.

Watch this space!
On 29 October 2024 at 11:09 am dcwhyte said:
@Allaboveboard - agreed. No suggestion on my part that Class 1 and 2 would need to apply for a CoFI license. However, the assumption by product providers that these licensess will have to comply with their (providers) CoFI-required FCPs etc., makes those FAPs de facto participants.

During the Select Committee hearing, I was asked whether I advocated for already regulated Class 1 and 2 advisers to be "in or out" of the Act - I requested that these licensees be specfiically exempted from any direct or indirect measures under CoFI.

The request was subsequently rejected.

However, as you rightly point out, the expectations from providers on Class 1 and 2 FAPs complying with their (providers) obligations will be interesting. Early signs are not encouraging.

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 4.94 - - -
AIA - Go Home Loans 7.49 5.79 5.49 5.59
ANZ 7.39 6.39 6.19 6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.79 5.59 5.59
ASB Bank 7.39 5.79 5.49 5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance 7.90 - - -
Basecorp Finance ▼8.35 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.54 - - -
BNZ - Rapid Repay 7.54 - - -
BNZ - Std 7.44 ▼5.79 ▼5.59 5.69
BNZ - TotalMoney 7.54 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.69 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 6.95 5.79 5.59 5.69
Co-operative Bank - Standard 6.95 6.29 6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 5.99 5.89 -
First Credit Union Standard ▼7.69 6.69 6.39 -
Heartland Bank - Online 6.99 ▼5.49 ▼5.39 ▼5.45
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.60 6.65 6.40 -
ICBC 7.49 5.79 5.59 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.25 ▼6.69 ▼6.49 6.49
Kiwibank - Offset 7.25 - - -
Kiwibank Special 7.25 ▼5.79 ▼5.59 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 7.94 ▼5.75 ▼5.99 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.49 6.95 6.29 6.29
SBS Bank Special - ▼5.89 ▼5.49 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 4.94 ▼4.89 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.19 6.49 ▼6.39 ▼6.39
TSB Special 7.39 5.69 ▼5.59 ▼5.59
Unity 7.64 ▼5.79 ▼5.55 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society ▼7.70 ▼5.95 ▼5.75 -
Westpac 7.39 6.39 6.09 6.19
Westpac Choices Everyday 7.49 - - -
Westpac Offset 7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 5.79 5.49 5.59
Median 7.49 5.84 5.75 5.69

Last updated: 9 December 2024 10:05am

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