Cost of joining APB at least $1000 per adviser

The government introduced the Financial Advisers Bill to Parliament yesterday.

Thursday, December 6th 2007, 5:20AM

by Rob Hosking

The new law covers the new rules for approved professional bodies (APBs) which all financial advisers will have to join, sets out standards for membership, more disclosure rules, and penalties for breaches.

Officials have estimated it will cost anywhere between $1,000-5000 a year for financial advisers to be part of an APB.

That range will depend on the extent of the monetary and reporting required by the APB. The regulatory impact statement accompanying the bill suggests some existing associations have sufficient expertise to keep costs at the lower end of this.

The rules are also expected to change the membership of the industry. One existing organisation, unnamed in the bill's preamble by officials, has estimated about 15% of their members will simply exit the industry as they are near retirement and do not want to face the changes.

The statement also confirms the issue of having APBs designed to cater to particular parts of the market was canvassed and rejected. In fact, officials are going to work with the industry to make sure that does not happen. Part of that process will also involve input from the Securities Commission and Ministry for Economic Development officials to assist and advise APBs "to extend the existing capabilities of existing bodies, or to promote the set up of an appropriate body in the transitional period of this regulatory framework."

There is, perhaps significantly, no mention of any financial assistance or subsidies to help alleviate costs.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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