Up to 700 advisers could miss AFA deadline

As many as 700 advisers may have to stop giving advice on KiwiSaver, managed funds and other investment products on July 1 because they haven't completed the necessary Authorised Financial Adviser (AFA) qualifications.

Wednesday, May 25th 2011, 7:14AM 6 Comments

by Benn Bathgate

From July 1 financial advisers regulations come into full effect, making it an offence for unlicensed financial advisers to provide retail clients with personalised investment planning services and financial advice on investment products.

Despite the nine-month lead in time, Financial Markets Authority (FMA) director of financial adviser regulation Mel Hewitson said 700-plus advisers still have not completed the required competency assessments.

"Nearly 400 of those need to do an assessment which can take three to five weeks to get through. It's clear they're running the very real risk they won't be authorised in time."

Hewitson said her team was working hard to ensure advisers who have completed their applications will be processed in time for July 1.

"We've set June 17 as our target date to process those advisers who have done the work and sent in full and complete applications," she said.

"That gives advisers time to notify their clients they can continue offering investment services."

The FMA has warned it will be checking advisers who applied but didn't make the deadline and will take action against any person claiming to be authorised after July 1 who is not.

"FMA will not be providing further warnings to advisers who fail to meet their obligations on time."

FMA chief executive Sean Hughes said the regulator is already checking advisers' websites against their list of AFAs for those advertising services they are not authorised to perform, saying they "won't shirk" from taking action on day one of the new adviser regime.

To date more than 600 advisers have been authorised and Hughes said he believes there will be 2,000 AFAs by July 1.

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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Comments from our readers

On 25 May 2011 at 8:12 am Independent Observer said:

Wouldn't this increased media attention provide a useful platform for Industry bodies to focus on those advisors who have achieved the required status?

All I'm hearing is how bad the financial planning industry is, and good ridance to these 700 unemployed cowboys.

Come on IFA - step up!

On 25 May 2011 at 10:14 am Forthright said:

Steady on IO your ears may be deceiving you. I am hearing a different story, a far more simpler and plausible story. Simply put, a number of Advisers started out with the intention of becoming AFA’s but as regulation became clearer they realised they could stay as RFA’s to continue in their business.

On 25 May 2011 at 1:46 pm comrade said:

I agree with you both. I guess however it is true - there has not been much positive communication out there to the publci yet. We need the providers and PBs to start getting the message out

On 25 May 2011 at 2:26 pm regan said:

I intend to apply later, and actually find the big stick waving and leash straining dogma slightly amusing. In other words, how many advisers are in my camp - not in the 700, and not really too worried/threatened by the bleak rhetoric coming from the FMA? This cohort of advisers have decided to go back to their core business, and focus on that rather than doing the prep for AFA. Many will have some of the unit sets already, and will slowly work towards AFA etc over time because it is the "standard" to aim for, but not at the expense or having a better year this year than the last couple.

On 25 May 2011 at 2:52 pm Majella said:

How correct you are, Forthright. I for one have all the ticks & points necessary for AFA status, including Sets B & C. But I am not yet 'compelled' to pay the additional cost of being an AFA (let alone the harsher disclsoure requirements) and as I had already decided to go Cat 2 products only anyway...so, until the PTB decide I MUST, then I will NOT.

On 25 May 2011 at 8:45 pm Independent Observer said:

I guess we all interpret messages differently. The point being - the industry bodies should be using this opportunity to reinforce the preferred message... rather than leaving this up to interpretation by the media & consumers