Conduct bill into new phase
The much-criticised Financial Markets (Conduct of Institutions) Amendment Bill, or COFI, took another leap forward in parliament yesterday, passing its second reading and going on to consideration by the Committee of the Whole House next week.
Wednesday, May 18th 2022, 7:15AM 
8 Comments
by Eric Frykberg
It passed with no sign of the Supplementary Order Paper (SOP) that critics have been counting on to resolve “defects” in the bill.
However, it is understood the SOP has been written and is out for consultation with selected interest groups.
The COFI bill will impose a code of conduct on institutions such banks, insurers or non-bank deposit takers. But it will also cover intermediaries such as brokers and advisers.
According to Financial Advice New Zealand, that is needless repetition, since advisers are already complying with existing law, the Financial Services Legislation Amendment Act of 2019 (FSLA).
This administers the FAP regime, which advisers are already facing up to at a considerable cost in time and money.
But far from acknowledging this overlap, Labour speakers doubled down on the merits of their law.
One speaker, Ingrid Leary of Dunedin South, told parliament that far from imposing tough rules on companies, it was equalising a “David and Goliath” relationship between banks and their customers.
Leary added intermediaries should definitely be covered by the law, along with financial institutions, and in fact should be investigated by financial institutions that use them as though they were employees.
“Firms have an onus to do criminal record checks on their intermediaries...they should have robust processes in place for dealing with misconduct.”
Leary also rebutted complaints that COFI overlapped and duplicated existing rules. Far from bringing needless complexity, the rules would be “complementary, acceptable and would not cause confusion.
“The Minister has seen the mischief in the market and has moved to rebalance things for the consumer,” Leary said.”
Another Labour MP, Helen White was even more enthusiastic.
“I am glad to see principles like this come into our law …. because these things hurt real people.”
But the Act MP Karen Chhour told parliament studies by the Reserve Bank and the Financial Markets Authority (FMA) found very few problems that needed to be fixed.
And she said the Insurance Brokers Association argued the bill would reduce the numbers of people giving advice and reduce the amount of information available to be disseminated.
“Institutions already have policy in place and (the COFI bill) will simply impose more regulation and bureaucracy,” Chhour said.
National MP Simon Watts was even more savage.
“What you will hear from the other side of the house is that this legislation is out to protect the consumer.
“But what I heard was an ideological attack on big bad banks.”
Watts said the banks employed thousands of people and in attacking them, the Government was attacking those people.
Nor was the law needed - it was a solution looking for a problem – and was not backed up by research from either the FMA or the Reserve Bank
“Time and time and time again we see an increase in the cost burden (imposed by Government) on hard working Kiwis in this country. This legislation will bring an increase in red tape on businesses and the cost will be passed on to the consumer,” Watts said.
Despite these arguments, the COFI bill progressed to its next stage by 77 votes to 42. Labour, the Greens and Te Pati Maori supported the bill, Act and National voted against.
This bill dates back several years but the Government is determined to get it through by mid-year.
Meanwhile, Financial Advice NZ is still holding out for the SOP in the hope that it will ease some of its concerns. Its chief executive Katrina Shanks has said her talks with Government officials on this matter have gone well, but no details are available.
| « Westpac’s results more good news for advisers | Borrowers in difficulty need to deal with it early » |
Special Offers
Comments from our readers
"Leary added intermediaries should definitely be covered by the law, along with financial institutions, and in fact should be investigated by financial institutions that use them as though they were employees."
Lets see what the IRD says about that!
What about finance companies, pay-day lenders and BNPL providers (aka retail salespeople)? They are the worst culprits and are not captured under any legislation. The local salesman who works at Noel Leeming doesn't have to pay any fees, levies, affiliation costs, aggregator fees or PI insurance, but can inflict more damage on a consumer within 10 minutes than any adviser could do.
Like every bit of legislation this government has introduced, they have made solutions for problems that didn't exist, with unintended consequences creating more opportunities for solutions to problems that shouldn't have existed...
Labour seems hell-bent on reducing the quality financial advice given to the public. Does it have a secret agenda to keep the public in the dark when it comes to financial matters so that it can continue its own policies of spending without consequence?
Is that genuine consultation, which might lead to changes in the final version presented to Parliament, or is it just to bind key groups into supporting the officials position - in terms of, if you criticise our work, you will no longer get advance notice of what we are going to do.
At the end of my 7th decade, I am getting increasingly cynical of "the game". The incumbents can use it (successfully I might add) to shut down debate.
Labour, Greens and Maori Party constituents will only suffer in ignorance.
The headline Financial Advice NZ hopes for COFI changes illustrates how myopic the government is being here.
I wonder if these MP’s have considered the reality of the real world for constituents where they can’t afford to access advice, they don’t have the appropriate plans in place and the government is left with people on the breadline.
The engagement with the advice industry for FSLAA was pretty reasonable and there was a message that we needed advisers, because the government could not look after people without us.
Now we have the same Government stating that we all need to be beaten into shape.
So which is it? The government’s schizophrenia is showing through…
"Leary added intermediaries should definitely be covered by the law, along with financial institutions, and in fact should be investigated by financial institutions that use them as though they were employees.
“Firms have an onus to do criminal record checks on their intermediaries...they should have robust processes in place for dealing with misconduct.”
Uhuh. So it's up to firms to do criminal checks. And there is nothing in place for dealing with misconduct. And to police us advisers.
There is no Register we have to be on. No process of applying to be registered, and no criminal record checking currently. And MBIE don't do anything. The Govt has no gatekeepers, whom we apply to and pay every year for the mere privilege of continuing to do our jobs. There is no framework of regulations covering adviser conduct, accountability and dispute resolution.
Right.
So that's what Cofi does? Fixes everything. Got it.
These comments from the likes of Leary reflect not just ignorance, but a lifetime subscription to myopic ideology.
Also looks a little desperate. A govt on the ropes - struggling to get anything done, a sea of bad headlines, polls going the wrong way, opposition on the rise - desperately twisting everything they can into voter-friendly soundbites.
@ Andy - spot on!
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
And she said the Insurance Brokers Association argued the bill would reduce the numbers of people giving advice and reduce the amount of information available to be disseminated.
“Institutions already have policy in place and (the COFI bill) will simply impose more regulation and bureaucracy,” Chhour said.
Sums it all up. This current lot in charge of the country are driven by their ideology not logic. This Bill will not benefit the consumer. We are just adding another layer of complexity again to something that doesn't need fixing.
No surprises also to see the Supplementary Order Paper (SOP) wasn't ready yet. Of course MBIE have to have their consultation process first! So just who are these "selected interest groups"? Presumably Financial Advice NZ etc. should be among them but if I am reading this article correctly they haven't heard anything from MBIE since their last talks?
Are MBIE even consulting with anybody at all because they have a proven track record of disregarding industry. Just like with the current CCCFA consultation process which is "apparently" underway nobody knows what is actually happening.