Faafoi: We don't want to wreck the system

Government is committed to cracking down on problematic remuneration incentives for financial advisers but does not want to "wreck" the industry, Commerce Minister Kris Faafoi says.

Thursday, March 14th 2019, 6:00AM

Kris Faafoi

He spoke at the Financial Services Council's Navigating Regulation advice summit in Wellington on Thursday.

Faafoi said he had heard the need for consistency in the way advisers were held to account to improve trust in the sector.

But any move to increasing regulation needed to strike the right balance to ensure it was workable, he said, and not too onerous on industry participants, while improving access to high-quality financial advice.

Faafoi acknowledged that many financial advisers were waiting for action and more information on the rule changes that are being introduced.

He said he hoped the Financial Services Legislation Amendment Bill would complete its final stages to becoming law in the coming weeks.

He also noted an industry desire to see the final version of the new code of conduct for advisers, which has been submitted to him for sign-off. Many businesses are waiting for the code to determine how they will operate under the new regime.

Input on the code was still needed from the Financial Markets Authority and officials and he said had asked for that to happen as quickly as possible so that it could be made available to the industry.

The Government has also said that it will "get rid of" remuneration structures that create poor customer outcomes.

Faafoi said it would take a hard line on soft commissions as part of that and would investigate insurance commission structures to ensure that they aligned with good customer outcomes.

He said he could understand that the moves might spark some concern but the Government was not "out to wreck the system". It would focus on taking a balanced approach, he said.

Faafoi said he did not want to access to financial advice reduce as a result of regulation - financial advice was increasingly needed to help New Zealanders manage their financial lives. Many felt overwhelmed by the volume of financial choices they needed to make, he said.

Tags: FSC Kris Faafoi regulation