GoodReturns
976499775
Niko Kloeten
Niko Kloeten
0
0 Comment
Save Story
Regulation

'It's cheaper' a dangerous phrase for advisers

Friday 29th of June 2012

The FMA, which recently released draft guidance on KiwiSaver distribution, has also outlined its view on what advisers need to do to show care, diligence and skill when it comes to insurance, product replacement and debt consolidation advice.

It said that when giving personalised product replacement advice, advisers should make an "appropriate comparison" of the client's existing arrangements with the new recommended product.

This comparison will require knowledge of the terms of the client's existing product and should be "clear, reasonable and balanced", the FMA said.

"It should not just focus on the benefits of changing, for example, "the new product is cheaper". Highlighting only the benefits could be misleading."

Want to read the full article?

Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.

You will also be able to comment on articles on Good Returns.

Sign in
Previous Article Next Article
Latest News
Adviser use of ETFs likely to continue to grow, Smart says
Adviser use of ETFs likely to continue to grow, Smart says
2 min read
FMA outlines its latest expectations for advisers
FMA outlines its latest expectations for advisers
6 min read
[Weekly Wrap] KiwiSaver in play; but outcome unclear
[Weekly Wrap] KiwiSaver in play; but outcome unclear
2 min read
Lifetime to buy Britannia and possibly get an equity injection
Lifetime to buy Britannia and possibly get an equity injection
2 min read
Regulation
More Read
FARs - where's the accountability?
FARs - where's the accountability?
3 min read
FMA warns on AML, won't name and shame
FMA warns on AML, won't name and shame
2 min read
Client-first may be too big an ask for biggest players
Client-first may be too big an ask for biggest players
5 min read
Call for more scrutiny of regulators
Call for more scrutiny of regulators
2 min read
Latest Comments
FMA outlines its latest expectations for advisers
All things said are great aspirational goals for a great financial advice industry, it mirrors what both the legislation and the code requires. However, like most things discussed it talks about what's expected not how it's done. The hardest aspect of financial advice today isn't what it is, it is how it is done. The how only comes from those that have done it, the how is only provided with examples. Guidance documents that spell out what's required along side how it it done. We’re still dealing with the same issues we started with in 2021, figuring out the how. And figuring out the how in every advice business is consuming resources that could easily be shortcut by the FMA demonstrating what they are expecting. It's not about “do it this way” its about this is the sorts of things we’re looking for. In the absence of standards and expectations, guesswork prevails. That represents significant risk to FAPs and the result is onerous overcooked advice processes for multiple advice operations and undercooked she’ll be right for single operators focused on getting the work done. Both approaches have potential for harm and as its been said earlier, leaves advisers open to explain they haven't been speeding with the authorities have pulled them over. The advice industry needs guidance on the how we know the what already.
1 day ago Jon-Paul Hale
Who is responsible for notifying policy changes?
Sticking an oar in, while we have “service” requirements the expectation that an adviser is responsible for discussing said change is relying heavily on assumption. 1. That the client hasn't moved and contact details haven't been updated. It happens more often than many think. 2. It assumes there is a servicing agreement in place to provide service. Remember the requirement is to scope service not provide it. A client deciding to have ad-hoc service on their request is a legally valid position to have. 3. If there is a service agreement that's realistic to what is expected, how long does the adviser push the issue to have the discussion before moving on with everything else they have to do? Again, a point that is not clear in the guidance to date. The challenge of the present rules is the adviser is responsible for ensuring the client understands the advice provided. How do you ensure you're covering this if a client doesn't engage despite genuine attempts to manage it? There's still a lot of “what if’s” in this whole are we’re only going to have clarity on once someone is taken to task about it. But first we need to have clarity on what ongoing service actually is, because right now demonstrated by the direct providers a letter once per year with a please call if you want to discuss is the current minimum…
1 day ago Jon-Paul Hale
FMA outlines its latest expectations for advisers
To correct errors in my previous post: "policies, templates, and controls" should read "policies, processes, systems and controls", and "is more conductive" should read "is more conducive".
2 days ago Paul Flood
FMA outlines its latest expectations for advisers
The goalposts haven't shifted, and no-one is moving the hole to the side of the green just to mess with the twilight burglars. The phrasing of the opening sentence ("having policies, templates, and controls in place is no longer enough") might suggest otherwise, but the wording is unfortunate. Having policies, templates, and controls in place was NEVER enough - it is a necessary, but not sufficient, condition of "playing by the rules" since 15th March 2021. A new player to golf might completely miss the ball on their tee shot - a swing and a miss. The wise coach/mentor/official knows that adding a stroke to the scorecard at this early stage of the player's development could have a deleterious effect. A reminder of the rule and the sanction - not applied at this early stage of development - is more conductive to continued participation. Focus on learning to hit the ball in the first instance, and move on to applying the penalty once the basics are firmly bedded in. No rule change, just a firmer application of the existing rules as the golfer matures.
2 days ago Paul Flood
FMA outlines its latest expectations for advisers
Instead of goal posts let's talk about holes. I was at a working bee at the golf club. We were doing some maintenance near one of the greens, and there was a club twilight series coming up. Just for a laugh the greenkeeper moved the hole to a particularly difficult spot, down pitch, near the edge, which rolled over a steep angle to a downhill run away from the green. Miss the hole and your off - you'd need to chip back up. Oh Steve. What I'm talking about is not "prevalence-induced", it's not a blue dot, and it's not the invention of a new risk. It's the FMA effect. I'm calling a molehill a molehill. As the supervision moves into a "mature phase" they are redefining what our safe harbour is. Until now we moved to understand what the goals were - get this qual, do these things, and you'll be fine. Now they are looking at other things, "raising standards" or changing the definition of the already-vague "good outcomes". They literally picked up the goal posts and shifted them. Moving that hole didn't change the stroke index. The rules of the game didn't change. It affected every player equally, and we all had the same goal to aim for. But moving it sure made things harder for everyone.
2 days ago agressively passive