[Weekly Wrap] A week of surprises
This week has been dominated by some of the things that came out of the Workplace Savings conference around advisers and KiwiSaver and there have been quite a few surprises.
Friday, August 15th 2014, 11:50AM 
7 Comments
I have to say I was surprised to hear the FMA say that after three years of regulation advisers still aren't up to scratch. Advisers have been working bloody hard, at the detriment to their day-to-day business, of doing the ever-increasing list of chores the regulator throws at them.
Then to make such a broad statement, which implies it's everyone who needs to lift their game isn't something which comes out of the How to Win and Influence Advisers playbook.
As I have noted before after three years of regulation there is very little evidence to suggest advisers are doing a bad job - just look at how little the Financial Advisers Disciplinary Committee has had to do.
We did ask the FMA for an interview to discuss these comments, however that request was turned down.
My message to advisers is keep up the good work and helping your clients.
The other comments which came from the speech were about banks and their KiwiSaver selling practices. This is another surprise that nothing has happened here. At Good Returns we have reported and editorialised on the issue many times over the years. It is one topic I have seen advisers really get worked up over during FMA presentations at conferences, yet nothing has happened.
One FMA person said to me all they had was anecdotal evidence there was a problem. Perhaps the most interesting comment was that if the FMA could find "evidence of potential harm occurring" then “yes that is something we will take action over."
The inertia in this area does tend to fuel theories that the big end of town exerts undue influence over things and that the regulators aren't keen on smaller KiwiSaver schemes.
Today we have run some interesting graphs on KiwiSaver funds and their fees versus performance - they make pretty interesting reading and have already started a good debate. We hope to be able to update this at a later stage with more info.
AML continues to occupy the minds (and task list) of advisers. The first annual returns are due in at the end of this month and we understand just over 100 of nearly 1000 responsible entities have filed their returns so far.
On the insurance front we are starting to see annual results come in. Partners Life has seen a big turn around from profit to loss. Story here. We will have some Sovereign numbers later today.
| « KiwiSaver fees under the spotlight | IFA working on pro-bono offering » |
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Comments from our readers
Unfortunately this approach is being adopted by a number of organisations. Our position is very clear on this. We don't do interviews by email. It is unprofessional, from a journalistic point of view.
We don't think that approach is putting our clients' (readers) interests first.
We are not in the business of publishing canned, PR controlled comments.
This is an issue recently discussed in a forum for journalists and our position is the shared by other publishers.
The irony is when the FMA's Elaine Campbell spoke at the IFA conference she extended an invitation for people to contact her and other senior FMA people directly if they wanted to discuss issues. Unfortunately with the media they take a very tightly controlled approach to communication, which frankly works against them.
The FMA got a serve from the Bankers Association over Sue Brown's KiwiSaver guidance note (soft legislation) approach to personal versus class advice. And since then they've shied away from tackling the bank even when Kiwibank's CEO is in the press saying he wants to *sell* more wealth products to existing clients.
They have captured the industry and are crafting it such that it is overly productised (DIMS regime) and ironically advice and choice free (think kiwisaver and the dominance of banks in investment).
This industry capture is evident in their approach to fees where they are effectively regulating price versus focussing on disclosure and education - Isn't price a commerce commission and consumer choice issue?
Yet, didn't Sean Hughs advocate individual responsibility and Sue Brown advocate for the industry to self policing?
The bank product/class advice model suits the FMA and non-bank advisors remain the whipping boy.
If there remain issues in the advisory force after three years then doesn't this indicate a failure of the FMA and the FAA? Not fooled is spot on. It's a self perpetuating bureaucracy.
Sadly, the minister responsible has gone to a bank and the current minister was recently described by the man of the moment Cameron Slater as "looking more and more like a stumbling, bumbling fool as each day rolls on"
I am suggesting this because a few years ago I rang them for some clarification and this is was the response "you are advised to seek legal advice". At least one adviser I knew got the same reply. Ok, questions here: what if my legal adviser's interpretation is different from FMA's? My point? If the one who wrote the regulation can't tell those who are suppose to abide by it, then who can? I have rang IRD, LTA, Studylink, etc. they all gave me answers.
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Hand wringing and hypocrisy rules from the FMA.