New commissioner leaving jackboots behind

The newly appointed Commissioner for Financial Advisers has assured advisers he will not be bringing “jackboots” when he moves back to New Zealand to take up his new position.

Tuesday, September 29th 2009, 5:46AM 2 Comments

by Sonia Speedy

On announcement of David Mayhew's appointment, some GoodReturns.co.nz readers expressed concern about Mayhew's time working for the UK's Financial Services Authority (FSA), suggesting that all the British regulator lacked "was jackboots". But speaking from the UK, Mayhew jokes he will leave his jackboots in the cupboard there. He also adds that appointing someone with a legal background to the new role is important.

"One of the reasons you need lawyers in this particular function is the importance of public law requirements of proper process when you're getting into a disciplinary function and how you conduct the issue around what evidence you need etc," he says.

"There is quite a lot of stuff there that is important in terms of protections for the industry as much as anything else."

The commissioner's role will include overseeing the creation of a professional Code of Conduct for authorised financial advisers and chairing the Disciplinary Committee which will hear complaints against advisers.

Mayhew has worked on both sides of the legal fence for the UK financial services industry, both defending firms against the regulator and presenting cases for it, such as in his role as leading advocate for the FSA between 2001 and 2005. He also spent six months as the FSA's acting director of enforcement.

Mayhew worked for legal firm Clifford Chance before moving to the FSA and is currently a partner at Herbert Smith. In the course of his career he has gleaned experience as an adviser to disciplinary panels in the derivatives market and while at the FSA gained experience working with the authorisations team, responsible for the individual regulation of approved Independent Financial Advisers.

Mayhew, who was born and bred in Dunedin, has lived in the UK for the last 28 years and is excited by the prospect of returning to NZ's shores to take up the role in January.

"The advantage for me is I'm returning to my homeland, hopefully bringing back with me some of the useful experience that I've had here and putting that to use for the benefit of NZ," he says.

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Comments from our readers

On 29 September 2009 at 1:42 pm Peter Barker said:

I am not sure that Mr Mayhew will be able to leave his Jackboots behind. New Zealand's level of financial awareness is very underdeveloped and is open to all sorts of ways for Advisers to provide less than a full and proper service for clients. The idea that you sell the client what he/she wants instead of assessing needs, ability to pay, attitude to risk, short medium and long term goals and a host of other issues, has to go and be replaced with a comprehensive system to ensure that advisers are capable of assessing client needs, justifying their recommendations and explaining the costs and effect of costs on any recommendations. On this basis a significant number of advisers in the industry in NZ will not be qualified to provide this service.

On 2 October 2009 at 3:46 pm Andy Phillipson said:

I agree with you Peter, but I also see two major issues: recently I was shocked to see the attitudes (and ignorance) of several advisers whom I had previously looked up to. I could not believe that they could not comprehend the importance of giving a full and accurate recommendation, regardless of what the clients requested. This brings us to the second point; once we have given a comprehensive recommendation, we are still at the mercy of the client’s fiscal intelligence, or they are at the mercy of our selling skills. Are we also to be judged on our salesmanship? Merely providing an illiterate client with a 20 page recommendation will not release us of our obligations. I think instead it could open us up to more litigation, just as it has in the legal profession. For example; the recent requirement for additional independent legal advice.