IFA confident adviser regulation won’t be hindered by under-funding

The Institute of Financial Advisers is confident the industry shake-up that includes the regulation of the industry will not be hindered by a lack of funds.

Thursday, July 23rd 2009, 7:46AM

Any fears IFA president Lyn McMorran had the implementation of the Financial Advisers Act could be underdone were swept aside after she met with Commerce Minister Simon Power, who reaffirmed his commitment to ensuring a smooth transition to the new regime.

"Mr Power and the government have been very encouraging," said McMorran. "He has assured us it will happen."

The government earmarked, in its budget, $11.7 million for the Securities Commission over the next four years to implement a regulatory body for the sector. The regime is expected to become self-funding through industry fees by the end of this period.

A spokesman for the minister said the preliminary report into the fees review has been completed, and expects the final copy to be completed in the next couple of months. He also confirmed the level of funding will not change.

Meanwhile McMorran says advisers need to start "waking up" to the impending regulation and what it means for them if they want to survive.

She fears some advisers could be left unable to practice and without a livelihood if they do not start preparing now.

"It's going to come at them like a runaway train if they don't wake up to it," McMorran says.

"They're going to have to be part of a dispute resolution body; meet the disclosure requirements; they're going to have to demonstrate competence. That will mean passing exams for a whole bunch of them that have never sat an exam in their life, or not for 30-odd years since school. They're going to have to have practice standards - that means written statements of advice that they're just not ready for yet."

But some advisers believe regulation of advisers in 2010 is just the clean-out the advisory sector needs.

New Zealand Financial Planning founding director Greg Moyle says those advisers who are keeping up-to-date with their professional development should not be worried about impending regulation and sees it as a chance to raise the profile of the profession. For those that have not been keeping up with the changes, he suggests it is time to "put up, or shut up".

Newton Ross Private Wealth Management principal Mike Newton offers similar sentiments.

"I think the bar needs to be pretty high and for people that aren't prepared to jump over the mark then I think it brings into question their desire to do things the right way," he says.

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