[Weekly Wrap] MRP process leaves a lot to be desired

The Government might set high standards and stringent rules for financial advisers - but it seems to have no intention of following those rules itself.

Friday, April 12th 2013, 1:00PM

by Susan Edmunds

As Philip argued in a blog this morning, if financial advisers approached any investment in the way the Government has been pushing the Mighty River Power share sell-off, they would be raked over the coals.

There has been no attempt at a financial education campaign for the public - just huge ads telling people to get in quick and buy shares, whether it suits their circumstances or not.

Advisers have told Good Returns they've heard about people taking out high-interest debt to pay for MRP shares, without any financial advice. It's lucky for the Government that its ministers are expressly exempt from the Financial Advisers Act, because some of their commentary has seemed reckless and irresponsible at best.

One of the most commented-on stories this week was about this same issue.

Professional Advisers Association president Peter Leitch said advisers had been put in a tough spot - they could offer no advice at all on the share sale, or go through the full advice procedure. He said there was no middle ground.

This seems to be an unintended consequence of regulation. Whereas previously people might have rung a trusted adviser to sound them out off the cuff, looking for some reassurance about buying a few thousand dollars' worth of shares, now advisers are hamstrung and would-be investors have to rely on commentators in the media to guide them.

When a lot of media outlets are reporting the Mighty River share offer as if it's a surefire way to grab a bargain and make money, that's a bit of a concern.

PGC sold up its stake in research firm Van Eyk, but Van Eyk told us from Australia that it wouldn't make much difference to what it offers.

And the Institute of Financial Advisers' professional development boss Joe Grayland has handed in his resignation, headed for a job with another organisation. He was tight-lipped this week but the rumour mill has told Good Returns his resignation comes out of frustration at the politics involved with the institute's conference planning this year.

On the deposit front, it was revealed that only Israel and New Zealand don't offer insurance for bank deposits. The Reserve Bank says insurance encourages risky behaviour but banking experts told us that it is a fairer system than the Open Bank Resolution scheme the Government is proposing, which is prompting fears of a Cyprus-esque savings account haircut in the event of a bank failure.

And in the mortgage world, the buoyant property market is tempting new advisers in, according to Loan Market.

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