Dodds: All Blacks must be better than club rugby
Advisers who are thinking about ducking personal liability by becoming financial advice representatives under the new regime have been given a serve by Institute of Financial Advisers chief executive Fred Dodds.
Thursday, March 23rd 2017, 6:00AM 
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by Susan Edmunds
The Ministry of Business, Innovation and Employment has published a series of questions and answers on the proposed new rules to govern the financial advice sector.
The exposure draft of the Financial Services Legislation Amendment Bill is out for consultation.
One question asks: Why would anyone be a financial adviser if they can have the lesser personal liability of being a financial advice representative?
“Some scenarios in which a consumer seeks financial advice will involve a level of complexity or uncertainty that cannot be adequately addressed using a financial advice provider’s predetermined processes, controls and limitations," MBIE said.
"In these cases only financial advisers - whose advice will not be strictly bound by processes, controls, and limitations - will be able to give advice. We think that will be a compelling reason for many individuals to become financial advisers and for many providers to want to engage financial advisers.”
Dodds said any advisers who wanted to “go and hide under an FAR rock” had no pride in the profession.
He said there was already a problem in that the existing regime had professionalised a subset of advisers, who had become AFAs and were seen to be more qualified than RFAs or QFE advisers.
But the new rules would diminish hat professionalism and make all advisers look the same, he said.
“If you take someone who is an AFA in a bank, if the bank decides all their existing AFAs are going to be FARs, the private banker or wealth investment adviser is not different to Betty down the corridor doing house and contents over the phone," he said.
"Stand up, guys. We’re trying to build a profession of financial advice. If it means personal liability, so be it. If you want to be an All Black you have to be better than a club rugby player.”
He said it was frustrating that while Australia was moving to higher qualification standards for advisers, "here we are effectively kicking level five to touch".
READ MORE: MBIE: Tell us what's better than FAR
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Comments from our readers
Fred
For example, having talked with many senior management figures within the industry, the consensus that there should be a distinction between sales and advice was evident. Yet this was cast aside in the midst of the consultation process by the regulator. The so-called process hadn't even been completed before the decision was taken not to create such a distinction.
With this fundamental aspect of an effective regulatory environment being discarded by FMA, it's little wonder many regard the submission process as an exercise in futility.
That said, I've sent my submission which includes recommending that consumer confusion - already identified by MBIE's own 'Final Report' (p.51) - be addressed. But I have my doubts whether this - or anyone else's recommendations - will be heeded.
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