The work on the lobbying and advocacy front has taken a slight back seat with the last of our submissions in. It’s really a waiting game now, to see the actual shape of legislation before we can do much more.
That said, many of us would have watched the Sunday program on TV1, asking whether New Zealand should consider a Royal Commission examining the behaviour of New Zealand banks.
For me, the jury is still out on whether we need to go that far. Although, some of the ideas proposed to date in the series of consultation documents associated with the Financial Services Legislation Amendment Bill (FSLAB) suggests the legislators and regulators shouldn’t be complacent.
Several professional adviser bodies have been collectively meeting with MBIE, the FMA and more recently, the Code Working Group – the objective of this being to present a united front wherever possible to regulators, and to advocate for sensible and pragmatic regulations that don’t disadvantage the smaller, non-aggregated financial advisers. It’s important work that most individual financial advisers struggle to find time for, and is a good reason to belong to an industry body.
The real question is, do those efforts actually result in any benefits to financial advisers and clients they look after? The answer is yes.
The Sunday program outlined the heavy pressure put on bank sales staff to sell insurance and KiwiSaver products, which is no surprise to anyone in the industry. Early in the FSLAB process, it was proposed that these sales staff should be called ‘Financial Advice Representatives’.
As professional bodies for financial advisers, we were appalled with this title. There would have been no distinction in the minds of a bank customer between a bank salesperson and a genuine qualified financial adviser providing them with sound long-term advice.
As a result of an enormous amount of input from the professional bodies on the difference between sales and financial advice, and the risks to ‘mum and dad’ customers going down this path, common sense finally prevailed with the term ‘Nominated Representatives’ being settled on – which was a nice win.
As I listened to the bank staff talking about the amount of pressure they are under to sell, it raised another glaring omission in all the consultation documents issued to date – there isn’t any mention of creating some whistleblowing mechanisms in the new legislation. The TripleA raised this vigorously in their last submission.
The fact of the matter is, it will often be the front-line staff in large organisations who know that what they are being asked to do crosses ethical lines. They didn’t have their faces and voices obscured on the Sunday program for no reason. In the public-sector, workers are protected by whistleblowing legislation, to protect them from political pressure to do things they know they shouldn’t. Given the critically important role the finance sector plays in the lives of all New Zealanders, the whistleblowing omission and gap in the legislation as proposed, needs to be addressed.
Firstly, the legislators and regulators shouldn’t be complacent. Secondly, they are right to be closely monitoring the issues and lessons emerging from across the Tasman and sanity checking whether similar behaviours are occurring here. Finally, our legislative framework is not yet locked down, so we have a valuable opportunity to take those lessons and adjust the framework, so it works for New Zealand and the ‘mum and dad’ customers that rely on the system.
I have been attending a number of industry events and listening to MBIE, the FMA and the Code Working Group. One snippet that appears to have emerged from their comments is current RFAs who are trained to the same level as AFAs but who have never bothered to take on that status (usually because of the extra compliance requirements), will roll into the new competency requirements as if they were an AFA. While we aren’t sure how many RFAs this will apply to, it’s a sensible decision.
The Board met on the 20th June and one of the focus areas was the numerous opportunities that seem to be there for the TripleA over the coming year.
Chief Executive, TripleA Advisers Association