Insurers welcome FAA changes

Natalie Cameron

Recommendations for a new version of the Financial Advisers Act were released yesterday, and include a level playing field for all advisers, who will all be subject to a code of conduct covering competency and conduct requirements. All will have to put clients first.

The Ministry of Business, Innovation and Employment said it did not recommend a commission ban as part of the FAA review because that would not be a "silver bullet" to improve the quality of advice.

It said commissions themselves were not harmful, and were just a means of funding the distribution cost of the adviser channel. Removing them could limit consumer access to advice.

A ban on commissions would not directly target poor conduct, it said, because the recent FMA report had shown not all financial advisers had high levels of replacement business, despite all being paid commissions.