The time is up for the FSC

[OPINION] The Financial Services Council is dead and its chief executive Peter Neilson should resign.

Thursday, November 12th 2015, 7:22AM 3 Comments

There is a place for an organisation to represent the interests of “product manufacturers” whether it is investments, life insurance or KiwiSaver.

However, the organisation that represents them needs to stick to working on things like technical issues and education.

An example of the good work the FSC can do is its Mind the Gap Forum next week.

It is not the job of the Council to delve into competitive issues. How life companies choose to remunerate their distribution force is a competitive issue.

If a company wants to pay 200% plus upfront that is their commercial decision.

Remember too, that it is the companies that make the decision how much to pay advisers to sell their products. The advisers are making these decisions.

The biggest issue is that the customer gets the right product for their needs at the appropriate price. A job advisers do very well.

The FSC and its predecessors have run into problems previously where it has stumbled into areas it should have avoided.

The fact that it has done this again shows poor leadership.

Its decision to pay Melville Jessup Weaver more than $200,000 to write a New Zealand version of the Trowbridge report is hard to understand.

It’s incredibly difficult to fathom why the FSC decided to accept MJW’s approach to writing this report without a clear brief on what it was addressing and more importantly not putting the research project out to a competitive tender.

There are many other organisations that had the ability to write this report.

This is a failure of management.

It is clear from my conversations with MJW and feedback from others that there was a very clear agenda behind this report.

Over the past week we have seen a number of reports that show the report started off down one track and then moved to another – anti-adviser one.

Partners Life and AIA have resigned their membership. Expect Asteron to follow suit and Fidelity Life should consider joining this camp too.

The sad thing is that the decision to write a report was an opportunity to address some issues and do some good things particularly around conflicts and churn.

My guess is that something new will come out of the demise of the FSC and it will be good for advisers and companies that choose to distribute their products via advisers.

Let’s be very clear risk advisers do a great job and they are passionate about helping people. It’s not all about commissions.

Tags: FSC

« FSC must fix its own ructions before it can fix industry

MJW report scores a D »

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Comments from our readers

On 12 November 2015 at 9:15 am Referee said:

Well said Phil.

On 12 November 2015 at 9:44 am From the Tron said:

I agree Referee. Well said Phil!!

On 3 January 2016 at 3:14 pm Comprehensive Planner said:

Good comments Phil, but I feel if we take a look at how and who funded this report we will clearly see that the greatest contributing FSC member is a company that actively works against advisers. This is evidenced in the complaint it laid with the FMA in October 2013 against one of its own advisers as a means of taking his client base without payment.

The FSC is an outdated entity run by a board and management with far too many conflicts of interest to list in the space available here so I feel the sooner it is folded the better for the advise profession.

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