Higher standards for RFAs a must for financial advice 'profession'
Allowing registered financial advisers to avoid higher levels of regulation would be a step back for the professionalization of the industry, it has been claimed.
Monday, March 21st 2016, 6:00AM 
11 Comments
by Susan Edmunds
It seems likely that those who are operating as unauthorised but registered financial advisers will be required to meet new competence, ethical and disclosure standards in a new version of the Financial Advisers Act (FAA).
SiFA submitted on the recent FAA options paper from the Ministry of Business, Innovation and Employment, asking what harm such a move would try to fix.
“The poorest reason for raising the regulatory bar for non-investment financial advisers is because they are now regulated differently from investment advisers. Surely you should be demonstrating problems and harm before even starting to consider regulation."
But Stephen O’Connor, an adviser, member of the Financial Adviser Code Committee and former president of the Institute of Financial Advisers said that seemed to fly in the face of efforts to move towards a profession.
“I’ve been thinking about whether people actually want to see financial advice recognized as a profession. It makes me wonder when some people are arguing for some advisers not to be subject to competency requirements.”
He said financial advisers needed to grow up as an industry and look at a wider picture for the long-term future of the industry. “There’s a bit of disrespect and infighting instead of all getting in the same canoe and rowing in the same direction.”
He said consumers deserved better. “Whether they have the expectation is a different story. I don’t know what they expect but to a degree they deserve better.”
All advisers should have a minimum competency standard, he said. “So there’s no confusion about who is or isn’t a financial adviser.”
Some could then strive to meet higher qualifications too.
But Murray Weatherston, one of the authors of the SiFA submission, rejected the suggestion that RFAs needed higher standards is financial advice was to be a profession.
“Without deprecating the advisers, I doubt that anywhere around the world that life insurance sales, mortgage broking or fire and general sales would be considered as a profession."
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What is a profession? It is "a paid occupation, especially one that involves prolonged training and a formal qualification." As an insurance adviser and holder of the CLU, your comment Mr Weatherston is unprofessional besides deprecating.
To avoid people misrepresenting my view, I am not against anyone voluntarily seeking to get higher qualifications - that is an admirable purpose for some but not necessarily all RFAs.
But the power of the State should never be used (in the absence of harm) to promote Professional bodies.
I despair that we have not been able to attract advocates of smaller Government to this debate. The anti-regulationists should be all over it!
Hmmm, maybe they are.
All this regulation started because of the Finance Companies - it had nothing to do with Insurance Advisers, or Mortgage Brokers.
There are always going to be exceptions - the Mortgage Broker in the Manukau Courts - but don't create obstacles where they are not needed. Most RFAs do a fantastic job; as do most AFAs. There are very few complaints these days; so why create extra layers of complexity & cost.
Congratulations on your well-researched and erudite contribution. Not.
Norman Stacey is not an insurance advisor by any stretch of anyone's imagination.
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Bureaucrats inevitably seek to expand power and influence, but at a cost - sometimes to a prohibitive cost to consumers.
Currently, Registered but not Authorised Financial Advisers do good and valuable work, among often under-insured Kiwis.
'First do no harm'. What is the problem??