Update on the Task Force

Friday, July 22nd 2005, 9:54AM

Had an interesting discussion with one of the members of the Task Force looking at the regulation of financial intermediaries.

It seems that the Minister of Commerce, Pete Hodgson, is going to get the report at the end of the month, but he has been well-briefed on what is being proposed.

According to a Ministry of Economic Development timeline the report is likely to be publicly released a week later complete with a government response.

This is similar to what the government has done with other reports.

What is interesting about the Task Force is that the problems in the "advisory" industry aren't so much with what readers of Good Returns would consider the mainstream advice industry.

Rather the problems exist in the budget advisory/debt consolidation area where vulnerable people are direct crediting their wages to these "advisers" who manage their finances but charge pretty hefty interest rates.

Also some comments are being made that people in the mortgage broking space need to lift their game and understand the risks of what they are advising on.

This Task Force member made the observation that there was a far lower degree of discussion and input into the process than he expected. This is a view that I have commented on a number of times before, but I guess it is too late to have another go at the apathy shown by advisers to this issue.

(One comment made by this Task Force member was the valuable input from the FPIA. He says the exercise would not have been as successful as it has been without the association's involvement).

The big worry point now is that the Task Force's report is going to get shelved as has happened with the Law Commission report on Life Insurance.

One issue is that the current Minister of Commerce is unlikely to be in this job following the election (either he will be in opposition or another portfolio) and a new minister may not make this issue a high priority.

Also there is the non-bank finance sector review to think about (for more details read this press release).

This review hasn't received as much publicity as it deserves. But when you look at it and how it has superceded the Law Commission report on life insurance (see this story) then there is the distinct possibly the Task Force report will be put on hold.

Let's make sure this doesn't happen.

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