[WEEKLY WRAP] Getting a handle on AFAs

Looking through the week's news the piece which captures my attention is the Financial Market Authority's discussion paper around AFA reporting. it's not one of the stories which has generated much reader comment, but it is siginficant.

Friday, March 28th 2014, 4:09PM

Ever since this idea was raised last year the thought has been that is an acknowldgement the FMA does not have sufficient resources to monitor all the AFAs in the market. The reality is there is no way it can track what all AFAs area doing so it is making it mandatory for everyone to complete yet another form for officials.

It's a point that was made in an interview with former Asteron CEO David Carter in ASSET Magazine about a year ago. The status quo isn't likely to be maintained and there are clearly some fairs that advisers will be foreced to join an institution a QFE or some other group which will become their regulator.

If that is the goal then it is misguided and not in the best interest of clients.

The reporting framework also seems to suggest the FMA still doesn't have a good, deep understanding of the advisory industry, hence a number of questions which went far beyond those needed for it to do its monitoring. It was refreshing to see a number of submitters made it clear that the FMA was over-stepping its mark and poking its nose into areas which it didn't need too. The question which is left unanswered is what this says about the regulator's mindset.

A topic we will address in the near future is whether the FMA actually has the necesary institutional knowledge within its walls to do its adviser monitoring role effectively. I am aware some senior industry players are concerned about this lack of knowledge.

Sticking with this theme of regulation the latest monitoring report had some items in it which reinforced the above thoughts. One of these was around AFA's and their complaints recording process.

The discussion about DIMS has continued to rage on and is important as it is also about the future of financial advice. The argument has drifted into one of active v passive management. The comments have become a little personal at times and some of them have been edited to remove comments which we deemed too personal. It's not easy drawing this line, but we do try our best.

Last night the Minister of Commerce annoucned he had approved the new Code of Conduct for AFAs. You can get your copy here.

Also this morning he named nine default providers for KiwiSaver. The two striking themes are that it is dominated by banks with the addition of BNZ, Kiwibank and Westpac. Also TSB is included due to its ownership of Fisher Funds. The only slightly redeeming feature is that Grosvenor Financial Services has been given default status. Grosvenor has always staked its colours to the mast of supporting advisers. It will be interesting to see how the firm develops now it has this new status.

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IFA working on pro-bono offering »

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