Who should be called financial intermediaries?
Concerns about ”mission creep” of the Task Force on Financial Intermediaries are emerging.
Tuesday, June 14th 2005, 6:51AM
by Rob Hosking
The Task Force’s options paper goes into areas which some believe go further than its original ambit.
As some expected, it has included mortgage brokers, real estate agents when the property being bought is for investment, and journalists when they are giving financial advice in question and answer columns.
However the bringing of mortgage brokers and real estate agents into the mix appears to have led the task force a step further, into other consumer credit contracts.
The thinking behind this appears to be influenced by an aim to improve overall confidence in New Zealand’s financial institutions, and also to improve financial literacy.
Yet it seems to be taking the task force a long way from what most people understand as “financial intermediaries”, says Justin Kerr of the Financial Services Federation.
“There are some large financial decisions people make in life: to commit to a managed fund, which has a high front-end fee and solid and regular contributions is one of them,” he says.
“Mortgages are obviously another big one. But low value consumer items seem to me to be a long way outside that.”
A consumer’s intention when signing up for such a contract is not to buy a financial product, but to purchase a television or white ware or a car, says Kerr. The credit relationship is only a by-product of that.
The task force’s options paper raises the issue because it says the existing consumer credit legislation - which was given much more teeth in April – shares the same flaw as New Zealand’s current securities legislation.
That is, it “predominantly focuses on the credit provider as opposed to the intermediary.
Who should be captured in the task force's definition of an adviser? Tell use what you think at www.assetmagazine.co.nz
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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