[Weekly Wrap] When is enough enough?

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Regulation has come in for some pretty heavy criticism over the past year or so. There have been complaints that it hasn't done anything to help boost the public opinion of advisers, and has made it harder in some cases for people to find a financial adviser. Now we're told it might be "dumbing down" the profession too.

Friday, November 1st 2013, 11:52AM 1 Comment

by Susan Edmunds

At an IFA event this week, president Nigel Tate said the number of advisers striving for higher qualifications had dropped since the requirement came in for them to be authorised.

Once they'd ticked that off, he said, there was little incentive to bother about anything else. The cost and time that went into meeting the base requirement meant there was little patience for tackling anything further. Advisers at the event said the AFA requirements weren't difficult to pass but took quite a while.

But Tate said that for the financial advice sector to be recognised as a profession, people needed to realise that just AFA status wasn't enough.  That sparked a bit of debate, predictably, including from commenters who weren't convinced of the merits of the CFP designation that Tate was promoting.

At the same event, UK adviser Barry Horner told attendees that there were opportunities in regulation - even the widespread, sweeping changes seen in Britain - provided advisers were skilled and had good business models. He has seen a lot of growth in advice markets catering for quite niche markets, such as golfers.

New Zealanders shouldn't think they've seen the last of regulatory change, either.

More changes come into force in the financial sector next year, when the Financial Markets Conduct Act takes hold. There are still quite a few questions left unanswered, despite the FMA saying it wanted to get everything ironed out well ahead of time. One of the questions that's been raised this week is how brokers can know whether they will qualify for an exemption from the requirement to have an independent custodian for client property. It seems there is a large amount of uncertainty, which is especially difficult for the big firms.

But no matter how much regulation there is with the stated aim of protecting clients, sometimes it's the more mundane events that make headlines and upset customers. Fidelity Life is in the news today because a stolen USB stick contained personal details of thousands of clients. An opportunistic car break-in has led to bank account details and investment information potentially being made public.

Fidelity's boss Milton Jennings says it's a timely reminder to all advisers that they need to protect their client information.

On the mortgage front, LVR restrictions are really biting - I've spoken to a number of people this week who are upset about how far-ranging the impacts have been. Whether that is a long-term thing remains to be seen but the construction industry is worried and even BNZ said there might have been more of a drop in lending than the RBNZ anticipated. BNZ is doing barely any lending to low-deposit borrowers now.

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