No decision on licensing: Dalziel
Commerce Minister Lianne Dalziel, in her first ever-public address to financial planners, has confirmed that the Government has made no decision over licensing the advisory industry.
Monday, November 24th 2003, 6:27AM
"The government has not made decisions on whether to introduce a licensing regime, or any other form of regulation on financial intermediaries," she said.Her comments were made at the fourth annual Financial Planner of the Year Awards, held in Auckland last week.
Dalziel said the licensing question is one that needs to be considered, and that will be done in the next stage of the government’s securities law reform programme, namely the review of the Securities Act.
She outlined a number of pros and cons of licensing.
"A licensing regime could have a number of potential benefits including raising the standard of financial intermediaries and as a result the standard of financial advice provided."
Additionally licensing would align New Zealand regulation with international best practice and further strengthen confidence in the rules that apply in the New Zealand market.
However, she also pointed out there were some counter-arguments, such as a dispute about whether a regime does in reality raise the quality of financial intermediaries and investment advice.
Additionally "whether it would simply cut down the number of industry participants pushing up the price of advice services for investors."
"These arguments need to be looked at in the New Zealand context. In particular, we need to view them against the backdrop of current industry self-regulation and the size and depth of the New Zealand market," she said.
Dalziel also said there is more that can be done in educating the public about savings and investment.
She expressed surprise that many people lack understanding on some very simple principles, namely ‘the higher the promised rate of return the greater the risk’, and if it sounds too good to be true, it is.’
Dalziel said that encouraging people to use the services of professional financial planners will at least enable people to recognise the difference between the get-rich-quick brigade and those that offer sound investment advice.
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The Financial Planner of the Year Awards are supported by AMP, ING, Sovereign and TOWER, with prizes supplied by Morningstar, Microsoft and Telecom.
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