In February, the Ministry of Business, Innovation and Employment (MBIE) released an exposure draft of the Financial Services Legislation Amendment Bill along with a consultation document inviting submissions from the industry.
Working Group, Financial Advice New Zealand has said it reveals that a unified industry voice is important now more than ever.
“While not discounting that a number of elements in the Exposure Draft are very positive, to achieve the overarching intention of this regulatory change – to help more New Zealanders access good financial advice – the public must have better clarity about the difference between sales and advice,” the Working Group said in a statement.
It said the proposed Financial Advice Representative (FAR) designation misses a big opportunity and that the public need ‘advice’ and ‘advisers’ to stand for something quite distinct from other financial service experiences.
“The public need ‘advice’ to stand for a highly valuable experience, in which they engage a qualified and accountable professional who uses their knowledge, expertise and discretion to help them make an informed choice appropriate to their personal needs and situation,” Working Group said.
“A Financial Advice Representative (FAR) in most cases will not be providing a comprehensive advice experience, and will not be individually accountable for their advice.
But with the word ‘advice’ in their title, how is a member of the public to know the potential limitations of the FAR service? How will they be able to differentiate between this and the comprehensive advice service of a Financial Adviser (FA)?”
It questioned how clients will be able to identify their preferred experience before they choose a person or brand to deal with.
“If the new regulation misses the opportunity to provide clarify for the public about the difference between the sales and advice, unity and the role of the Financial Advice New Zealand will be all the more crucial. In this changing world of financial services, it is abundantly clear that the adviser community, the public, and ‘advice’, need the clout of a strong, unified voice - Financial Advice New Zealand.”
The new regime is proposed to take effect in February 2019, six months after the approval of the Code of Conduct.
The draft bill can be found here www.mbie.govt.nz/faareview and submissions can lodged until March 31.