Regulation 'not successful'

Claire Matthews, of Massey University, said the Financial Advisers Act and the introduction of the Financial Markets Authority had not been as successful as they could have been, in improving public faith in financial markets or increasing their stability.

“I don’t think it has worked as well as it desired. I’m not necessarily convinced it’s made the public more confident in using advisers but it has made it more difficult for them to find an adviser because they have disappeared from the market.”

She said it was a situation that would probably improve over time.

“I think to a certain extent the FMA has gone too far, which was a possible reaction to certain events. There was a feeling that they needed to clamp down on certain people in the market. But many people who were doing a good job have now left because of all the regulations they have to comply with now. The collapse of finance companies and a minority of advisers who took advantage of their clients have resulted in the new regulations,” Matthews said.