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Regulator's forums on FAA Review options a success

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NZ Adviser | 17 Feb 2016, 11:12 a.m. Agree 0
The Financial Markets Authority forums on the FAA Review recently took place and the PAA CEO explains why positive changes for the industry are still on course.
  • Giles Thorman | 17 Feb 2016, 12:31 p.m. Agree 0
    I thought the "delineation" between sales and Advice were covered under the existing Act/Rules?

    A client can instruct you to carry out a specific task where No Advice is sought, the client then signs a contract that clearly acknowledged they have not sought advice. Excessive use of this "Contracting Out" or "Sales Only" should be investigated as it would seem to infer the Person was trying to shirk their responsibilities to ADVISE their clients or the General Public.

    The concern I have here is that now there seems to be an undercurrent push to allow for more "Sales Only" and effectively enable people to contract out of their responsibilities. By any chance would this be aimed at Bank Staff engaged in Insurance Sales; or am I just being needlessly suspicious??
  • DH | 17 Feb 2016, 02:40 p.m. Agree 0
    You're right, Giles. Though on reflection I don't think this is a bad thing at all. Right now people are making no-advice purchases while experiencing, in their own thoughts, an advised sale. Right now there is no CLEAR distinction between Sales, and Advice, until, given the chance, a proper adviser explains it. In other words, one side has avoided their responsibilities, while the other thinks they haven't. What is likely is a distinction between advice and sales, which will end up being similar to the intended-but-completely-failed attempt at creating a distinction between AFA and rbnAFA (colloquially called RFA). There, the envisaged "premiere" status AFA was meant to carry some kind of mana that an rbnAFA could only aspire to, and was sought out by the public, after they had been educated to appreciate the difference.

    We all know what the feeble attempt at education looked like - a short-lived cowboys ad.

    Right now the carve-outs for QFE "advice" are far, far too generous. Any (real) ADVISER will have a story of what it feels like to compete with someone operating on a totally different level in terms of product comparison, disclosure, research, needs analysis, advice statements and replacement business advice forms. Because in reality, one really is an ADVISER, and the other, quite frankly, is totally not.

    As uncomfortable as some may be with it (namely, those end up labelled as such), Sales, which is an appropriate euphemism for 'product pusher', single-provider, or on-a-salary-but-must-meet-tough-targets, is a distinction that should find a place in the revised regulations.
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