PAA: Draft bill essentially 'demoting the AFAs'

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It is wrong that the majority of participants in the financial services sector do not need any level of qualification but can still be called a financial adviser, the PAA says.

Tuesday, April 4th 2017, 6:00AM 3 Comments

by Susan Edmunds

The association made a submission on the draft Financial Services Legislation Amendment Bill.

The bill is set to create a more level playing field for advisers than the current AFA, RFA and QFE designations – although competence requirements will be determined by a code of conduct that will be tailored to different types of advice.

In its submission, the PAA said there was a risk of alienating the already too-few AFAs with the proposed changes.

“By aligning all AFAs and RFAs into one single term – financial advisers -  you are essentially demoting the AFAs to the level of the RFA.

“All of a sudden there is no differentiation between those that have (at least) level 5 qualifications and those that have (potentially) none. We think a lot of AFAs will be very displeased and may well opt to become a financial product representative in the future. This will not be good for New Zealand.

"Therefore, there needs to be naming allowance over and above financial adviser to differentiate and highlight those advisers that are qualified over those that are not. We are not against naming everyone a financial adviser but there does need to be differentiation.”

Chief executive Rod Severn said advisers' competence, knowledge and skill should be determined by a properly moderated and resourced industry-led training programme, leading to large-scale completion of an industry standard qualification.

“It is wrong that the majority of participants in the financial services sector do not need any level of qualification but still be called a financial adviser. This does not help public confidence.

“A largely unqualified workforce only creates problems in the future. Attaining an industry standard qualification also allows portability across the industry and well as standardisation. Allowing product providers to pick and choose in-house training regimes that reflect their internal needs and aspirations as opposed to the industry and public's needs and requirements, will not add to the low esteem advisers are regarded in today. All new advisers commencing a career must do level 5 or equivalent.”

But he said work-based assessment was acceptable as part of the transition for existing advisers.

The PAA has been scathing about the proposed new "financial advice representative" category and said "financial product representative" would be better.

But it said, whatever they were called, it was not right that they were not individually responsible for conduct and disclosure, as others in the industry would have to be.

Tags: Financial Advisers Act Financial Markets Conduct Act PAA

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