Battle lines clearly drawn

Reading through the 167 submissions made on the Options Paper shows there is a clear division within the industry around advice. On one side there is the camp which wants to see a clear split between advice and sales, on the other side are the banks.

This probably comes as little surprise, but seeing it so clearly means that officials will have a very difficult process coming up with a solution to the various issues around advice.

Unfortunately the split we are seeing harks back to what happened when the Financial Advisers Act was originally written. The big end of town fought what could be called a rear-guard action which resulted in the creation of that awful QFE category. As one chief executive at the time said to me, they needed some sort of structure to house many of their advisers who wouldn't come up to the standards being proposed.

Under the regime the FMA essentially delegates its monitoring role to the company, and it is up to the company to police its sales people.