Complaints of fear mongering by financial educators rejected
Complaints have been coming in about training establishments putting undue pressure on mortgage advisers to take new courses to meet FAP requirements.
Friday, July 29th 2022, 8:27AM 
9 Comments
by Eric Frykberg
One adviser actually accused the financial education industry of “scaremongering” by telling them to take new training courses or risk being shut out of the industry by the Financial Markets Authority (FMA).
The training industry, though, reject these claims and say they are simply doing their job.
The complaints have come as time runs out for advisers to get full licensing approved under the FAP programme.
While many established advice firms were licensed months ago, only a minority of all Financial Advice Providers have either got their licence or even begun applying.
According to the complaints, training establishments have taken advantage of the stress caused by the looming FMA deadline and the worry that advisers will be unable to cope.
They have used this anxiety to push for more business.
The complaints about financial educators get some measure of support from one long standing adviser, The Lending People general manager Andrew Scott.
“They have created a lot of fear mongering by saying that if you have the old Level Five qualification then you should really do a gap course to bring you up to speed with the new Level Five qualification,” Scott said.
But he said this claim clashed with the actual rules.
“If you look at the code, it is specific, it says an adviser can demonstrate competency either by having the old Level Five qualification or the new Level Five qualification.
“There is no requirement to complete a specific gap course.”
However two big education players said there was no fear mongering at all – instead they were just doing their job.
Professional IQ College, said advisers had to prove their financial competency and his company existed to help them to do that.
Partner Tim Larkin, said under the code, there was a new regulatory environment and their advisers had to be aware of it.
Larkin said his company had been approached often by people wanting help and it did not put pressure on anyone to do its courses.
“I would not see that as scaremongering at all, I would see that as filling an immediate need that advisers are calling out for.”
According to Larkin, his firm was filling a gap in the knowledge requirements of Version Two of the Level Five Certificate of Financial Services compared with those of Version One.
Strategi, also rejected any suggestion of fear mongering.
Chief executive Daniel Relf, said all advisers would have to be able to demonstrate competence, knowledge and skill by March 15 next year.
“There are other ways of getting there, but the quickest and easiest way is to complete the New Zealand Certificate of Financial Services, Level 5, Version Two,” he said,.
“If they do not complete this by March 15, next year, they can no longer provide financial advice.”
Relf said he was not scaremongering, his company was a mouthpiece providing the required information.
“People cannot claim that this is new to them, they cannot claim that this is scaremongering.
“They cannot claim we are just trying to drum up business, this has been made very clear for four years.”
Some advisers have suggested that the real trouble is that passing a course on Version Two would gradually become the default way for the FMA to assess competency.
Other methods would prove time consuming and expensive and be open to too much challenge for them to last for very long.
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Comments from our readers
Perhaps this is part of the reason that more advisers haven’t already applied for their FAP license. They are too busy currently spending time and money completing courses which they have been told (incorrectly) are required to hold a FAP license. Maybe a percentage of advisers are now also looking at the time and cost of all this study and have elected not to continue in the industry?
The FMA need to look at the lack of FAP applications to date and the possible correlation effect of advisers been recommended courses that are not required to hold a FAP license.
I see many of my colleagues in Australia, lifting their game as professionals and completing their masters in financial planning or tax. Here we are in NZ, squabbling whether we should be made to sit Level 5. That's entry level by the way.
As I have said for far too many years; who ever strives to meet a minimum standard? Oh, I guess we do.
Looks like competition in the market is about to dramatically drop off a cliff. Here's to March 2023!
Code standard 6 says you need to have Level 5
Code standard 7 says you need to have the investment strand.
Code standard 8 says you need to have a specialty strand.
While talking to Andrew Scott, I wrote an article around this some time ago.
The technical bit that is being overlooked is the National Certificate, and NZ Cert V1 had financial advice as a separate strand; this has been incorporated into the core for NZ Cert V2.
It is this financial advice strand that is missing in most of the Life & Health qualifications out there. This is where there may be a bridging requirement for those qualifications.
Until the FMA is very clear on this, the comments that Level 5, whatever, is fine is only sort of helpful.
The onus for qualifications is on the FAP and the FA. It's up to these two entities to get it right, not the rest. And the FMA being much clearer in this area would be helpful for FAPs and advisers to get this right.
So the idea is Level 5 Core (V2) or NZ Cert/Nat Cert Core & Financial Advice is the intended qualification to meet code standard 6.
With CS7 and CS8 needing the specific strands.
Further to this, the Code Working group has indicated an expectation to move to a Level 7 requirement for investments. The older Level 5 transitionary options are expected to disappear when they revise the code for this.
And then, we have Code Standard 9, which is about having a working understanding of the regulatory framework. With CoFI being passed, this changes the environment again and potentially means that all Level 5 qualifications fall short of Code Standard 9.
But as we have found so far, the FMA has been more generally ticking the box, which is to say they are wanting to get everyone on the playing field first.
Remember, we are still in the zone of existing advisers having a hall pass on qualifications at the moment. Only new people need to have Level 5 in place, and that's going to be the new one (V2), not the older ones.
Once March 2023 ticks over, we will likely see some details about what is expected and the gaps.
Until then, make sure you have your Level 5 in place (with your specialty) and get your full license sorted out.
That last one is the big one the FMA is concerned about. Without a license to work under from March 2023, the discussion of the qualifications is moot.
it's reliability, trustworthiness and honesty. this is what will give good customer outcome 100% of the time.
i've never heard a single complaint from people about an adviser's qualification. dishonest and dodgy ones comprise more than 80%.
i'm not against at least some basic qualification, but personally i put character above qualifications. unlike other professionals like doctors, lawyers or accountants who needs no introduction to what they do, people still needs to be educated about insurance or investments.
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