FMA to review access to financial advice
The regulator is launching a review to help it better understand why many New Zealanders are reluctant to access financial advice. The review will also delve into industry business models.
Friday, April 4th 2025, 9:00AM 
4 Comments
by Kim Savage
FMA chief executive Samantha Barrass told the Financial Advice New Zealand National Advisor Conference that it has been two years since the financial advice regulatory regime came into full effect and it is time to check in to see if it is delivering for consumers.
“Availability and quality of financial advice are cornerstones of the regime, and indeed written into the legislation’s purpose,” Barrass told delegates.
“Our view is that quality and availability are complementary, but they can also result in trade-offs.”
Focus areas for the review will include consumer preferences and demographics, industry business models and market dynamics, digital advice and innovation, and ease of provision of financial advice, but the FMA says it is open to feedback on the scope of the work. .
“We know there are many positive impacts on consumers who receive good quality financial advice,” says Barrass.
“This is about understanding how we as a regulator continue to ensure we regulate in a way that ensures quality advice reaches even more New Zealanders.”
FANZ Chief Executive Nick Hakes and representatives from the FANZ CEO Advice Forum met recently with the FMA to help shape the draft terms of reference for the review.
“We note the focus on industry business models, consumer preferences, innovation and the ease of provision of financial advice.
“We look forward to further constructive dialogue with the FMA as they progress with the review,” he says.
Business models to come under the microscope
As well as the review into access to advice, the FMA has also signalled a deep dive into business models in the advice sector.
“Our ongoing monitoring and supervision of the sector has identified that some key drivers of certain behaviours and poor conduct are closely linked to these business and remuneration models,” says Barrass.
“By looking under the bonnet of these structures, we will be able to better understand where to focus our regulatory efforts, and have more deep and meaningful compliance conversations with advisers.
“It will also inform our review of access to advice.”
Samantha Barrass says while the review scope is still to be finalised, it will pave the way for a reduced regulatory burden on providers with lower risk models, with the FMA zeroing in on those with higher risk models.
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Comments from our readers
2. The financial literacy rate in NZ is pretty low, and information overload (required by whoever, be it the authority or dictated by compliance "experts") will turn people off even more.
3. Every one have their own unique behaviour, therefore, a one size fits all approach will not work. Financial advice is both, a science and an art. You need to be able to blend it.
4. Last, but not the least, apply the K.I.S.S. rule.
If you don't understand the above, you are most likely haven't done or been in sales or one to one advice before.
Let take the average Mortgage adviser that has their own FAP licence.
99% of these advisers will be compliant with their FAP license requirements and taking time and effort to meet their FAP requirements which is great and better for the industry.
But because the banks and lenders will only let a select few have Header agreements or Header FAPs with them directly all the other FAP;s are forced to belong to one of these header FAP’s.
These Header FAPs are forcing all its members (including FAP licence holders) to be compliment under there header FAP essentially treating other FAP licence holders as authorised bodies under the group licence.
What does this do? it basically doubles the amount of regulation a single FAP licence holder has to do as they are repeating regulation requirements twice under their own licence and then again under the header group licence.
This may not be what the FMA intending licencing to be but for most FAP license holders they are wondering now why they all just dint go under one header licence and be done with it then the FMA would only have a small few FAP licences which in turn would defeat the whole licencing function.
How does this effect the consumer?
Over regulated Advisers have to pass a lot of this onto the customers they engage but bank staff do not, so is it in the banks best interest to push more regulation requirements onto advisers? maybe. Some customers rather that read and compete a 42 page form will just go direct to a bank branch with no advice given.
The Master/header FAP agreements groups have with lenders is their sole strong hold /monopoly over mortgage advisers.
Dealer groups /master FAP holders, also create behind the scenes referral structures based on bulk referrals by their members, where the groups receive back-office referral fees that are not disclosed to the advisers let alone the public.
Advocates for advisors I think not.
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Consumers' apprehension to advice? What business models the FMA believe advisers should have? How should advisers be paid as in their opinion this is impacting on all of this?
I would ask, which advisers, Life and Health, Investment, Mortgage or are we all assumed to be the same?
Start with the apprehension and without making assumptions investigate if that is correct and what the real reasons are, not assumed reasons.