A Conversation with the Policy Setters
The future of the regulatory environment and review of the Financial Advisers Act.
It was a packed event as over 250 advisers filled the room at the Conversation with Policy Setters event, co-hosted by the PAA and IFA this Wednesday, 5 November in Auckland.
The discussion was chaired by PAA independent board member, Angus Dale-Jones, and included remarks from Rob Everett, Chief Executive of the Financial Markets Authority; David Ireland, Chair of the Code Committee and Iain Southall, Manager of Corporate Law for the Ministry of Business, Innovation and Employment. The event concluded with questions from the floor.
If one message can be taken from the event it is this – Have your say.
Be part of the conversation; make sure the regulator really understands your issues; put them on the table; ensure that this is a better consultation process than previously.
The PAA has been invited to engage with the Regulator and assist with the review – we will be highly active in this area and absolutely encourage you to take part in shaping the future of your profession.
Policy setters share their views on the road ahead
Each panellist outlined their views on the road ahead; the objectives of the FAA review; and what they expect the review to cover. All three agreed that the review will be comprehensive (and will most likely include a review of the Financial Services Provider Act); that the review is an opportunity to take a proper look at what is now a very different environment from before regulation of the sector.
Hear what the panel had to say and the questions from the floor online – click below to view. Or for a brief snapshot… read on
Watch online – Part one
Watch online – Part two
Summary of points from Rob Everett, Chief Executive of the Financial Markets Authority
- Seen enormous effort in the sector in what has been a significant era of change.
- The review is an opportunity to see what is working and what isn’t.
- Guiding objective of the review is simplification - the current legislation is overly complex and not well understood by consumers or advisers working in financial services.
- More work is needed to ensure that the value proposition and quality of advice is fully understood by consumers. Still lack understanding about what is driving consumers and what they understand of the sector - need a much better understanding of consumer needs and drivers.
- There is a critical place for quality advice in New Zealand; the FMA is committed to helping the sector grow and helping to solve challenges.
- There is still confusion amongst consumers about the difference between an AFA, RFA and QFA.
- May need to consider some raising-the-bar for those advisers that currently don’t need or do not have a qualification.
- Succession planning is an issue that needs to be addressed; with the majority of AFA’s over 50 years old and less than 20 per cent under 40, there is a real need to attract new, younger entrants into the profession.
- Remuneration including commissions, fees and incentive payments will be looked at; acknowledging that as there are a variety of business models and no easy answer; that there is a difference between the ‘big’ and ‘small’ end of town.
Summary points, David Ireland - Chair of the Code Committee
Iain Southall - Manager of Corporate Law for the Ministry of Business, Innovation and Employment
- The importance of maintaining engagement with advisers through the review process – as past experience has proven, advisers engaging in the process and providing feedback makes a big difference.
- This is an evolutionary process with the intent of enhancing the regulatory regime and work in the interest of consumers.
- An outline of the history of the Code Committee and how it works in the regulatory environment.
- While the Code relates directly to AFAs, it also sets a baseline of standards for all financial advisers (RFA,QFE)
- Will review competency and ethical standards, client care obligations, CPD requirements, compliance burden, viability of adviser business models and consumer access to advice.
- Very keen to commence the review shortly and equally keen to do it in a consultative and openly collaborative manner.
- Improve on the past experience of consultation; during the original implementation of the Act, consultation was not very well done.
- This side of Christmas will be talking with advisers, gathering viewpoints and making sure issues are on the table. Next year, a formal process will be put in place; this process including timeframes for issues papers and submissions will be communicated.
- Consumer confusion is a real concern – what do they understand?
- Recommending a comprehensive review of the Act; need to look at the balance between quality of advice and access to advice – do we have this balance right?
- The structure of the regime is on the table for review – a look at what all the moving parts do.
- The review will also cover the cost of regulation against the benefit for consumers, confusion over different types of advisers, compensation, disclosure documents
- The review will be future focussed – want to future proof the regulation.
The PAA has been invited to engage with the regulators to assist with the review. We will be very active in the area and encourage you to participate when we ask for your comments and ideas over the coming months.
Update on your PI Policy
The PAA Board has been working with Marsh and Lumley on the renewal of your Liability Programme, the proposals will once again be sent via the TechCertain platform and will be released early next week.
Please complete the proposal documentation as soon as you are able to ensure that cover remains in place.
This year there is an additional cover option of Cyber Risk Insurance. This is the first time the PAA have endorsed and offered an insurance policy for Cyber Risk, as Financial Advisers we hold a duty to protect our clients personal data and we encourage members to take a proactive approach to their cyber risk management.