Tate: Is regulation helping consumers?
Institute of Financial Advisers president Nigel Tate is compiling a full list of the regulatory expectations placed on financial advisers, and the time and cost involved with meeting them, to give to the Financial Markets Authority.
Wednesday, April 30th 2014, 6:00AM 
3 Comments
by Susan Edmunds
He has already had one meeting with the regulator about the regulatory reporting guidelines and is to meet them again early next month.
Tate said he used his recent meeting to “strongly articulate” concerns about the breadth of information being requested in the new reporting requirements. The FMA is planning to make it compulsory for all AFAs to produce an annual report, called an Information Return, each year. AFAs would have to complete the first return relating to their business as at June 30 by September 30. After that, they will have to submit a return each year.
In response, the FMA had agreed to have various industry groups attend a workshop to determine what was appropriate and what would add value, he said.
Issues around the completion of the annual information return were compounded by the other requirements placed on advisers, he said. There is the AML annual report as well as the process of renewing licenses each year, and new regulations looming for DIMS providers.
Tate said a large amount of the regulatory requirements could be wrapped up into one report.
He said it did not make sense that for AML purposes, advisers had to submit a report on years when they were also audited. “It’s the same year, the same period, the same things. I’m trying to draft a list of all the compliance imports on advisers and the time involved in complying and the cost to give them an overall list of things that now have to be completed. How many have a direct benefit to consumers?”
Regulatory creep would probably drive out the 1900 AFAs left in the market, he said. “It can’t be good for consumers in terms of getting good, unbiased advice. The objectives of the Financial Advisers Act don’t seem to be being met as effectively as they should be. It was about the efficient delivery of appropriate advice. It’s not efficient any more. We need to be strong on it with the FMA.”
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DIMS Dump Increasingly Mountainous Systems on advisers so its 45 hours a week on paper work and 5 hours a week actually advising mums and dads
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But the design of the regulation makes Nigel's call for a single report well-nigh unachievable.
Only individuals can be an AFA. So AFA reporting is on an individual basis.
AML reporting is on a reporting entity basis. In my sole adviser practice, I am the AFA and my company is the AML reporting entity. Many AFAs work for QFEs or multi-adviser practices - it is those entities that are the reporting entity.
Class DIMS licences are likely to be mainly if not solely sought by businesses, not individual AFAs.
For completeness FMA grants of personalised DIMS authorisations will be to individuals.
I think it is very important that these distinctions between the individual and the entity are maintained and strictly observed in the reporting framework. Otherwise, AFA reporting could easily be bulked up by demands for additional information about the entities for which AFAs work (defining work in a wide sense).
I am sure even the banks would be against that approach. So for once the interests of the big end of town and the little end of town should be aligned.