Minister of Commerce and Consumer Affairs, Kris Faafoi, as offered his assurance to advisers that the Government has taken a “measured and balanced approach to ensure that the new regime is workable”.
Referring to FSLAB and the incoming changes in his address at the recent Financial Services Council Summit in Wellington, Faafoi said he appreciates that, “these changes may be somewhat unsettling for the industry as change of the status quo places challenges as well as opportunities”.
He added: “I have been clear that the Bill must strike a balance between ensuring consumers can get access to quality advice while not imposing any undue compliance costs on the industry,” noting this is important for small advice businesses in particular.
Acknowledging the industry’s concern on the future of commissions, he said the Government will be looking at “how we can ensure that the way commissions are paid is aligned with good customer outcomes. We want to make sure we find workable solutions in the sector that keep those good customer outcomes top of mind but also ensure that consumers can still access financial advice.
“I have been clear that the bill must strike a balance between ensuring consumers can get access to quality advice while not imposing any undue compliance costs on the industry”
“Financial advisers play an important role in helping Kiwis towards better wealth management, understanding financial risk and opportunity and ultimately encourage confidence in financial decision making,” he said.
During a Q&A with FSC Chief Executive, Richard Klipin, he emphasised the mutual benefit to consumers, the sector and the Government in making sure that New Zealanders receive sound financial advice.
“There are some issues in the insurance sector at the moment that we’re working through but we want to make sure that every New Zealander is insured for whatever may crop up in their lives,” he said, referring to the under-insurance issue in New Zealand.
The FSC Roadshow kicked off in Wellington before heading to Auckland, Christchurch and Dunedin.
Various industry leaders gave presentations summarising the progress of their respective components of the new regime so far.
MBIE Manager Financial Markets, Sharon Corbett, spoke on the progression of FSLAB; FMA Director Market Engagement, John Botica, spoke on licensing and fees; and Code Working Group Chair, Angus Dale-Jones, spoke on the draft Code now with the Minister for consideration.
Financial Advice New Zealand CEO, Katrina Shanks, also recapped the activities the association is undertaking.
Botica noted that now is the time for advisers to consider how they will operate under the new regime and whether they will apply for their own licence.
“Transitional licensing is designed to be straight forward and will be fully online. There is flexibility to change your approach along the way so don’t panic. The FMA will provide guidance to help with your preparation and licence applications,” he said.
During a panel discussion, each panel member put forth their opinion when asked what success for financial advice would look like to them in 2025.
Corbett: “I think it looks like consumers feeling that they can get answers to their questions from ‘what Kiwisaver fund is right for me?’ right through to their complex investment planning and that they know where to go and they trust that advice when they get it.”
Shanks: “I think it’s financial advisers being viewed as professionals from consumers and from that consumers understand the value of the services that you offer them and they sought out your services because they see it adds value to their lives.”
Dale-Jones: “People knowing when they need to get financial advice. So financial advice doesn’t just become a binary decision but it becomes a natural extension of peoples’ participation in financial services.”
Naomi Ballantyne: “We widen the audience for the products that we talk to. The issue with having a largely advised market space is you to tend to talk to 35-40 year olds who own their own home or they are small business owners, so there’s a whole range of blue collar workers, younger clients, older clients who are not actually currently adviser clients. We need to figure out what products and what distribution channel and bring them in as well because they all have needs and money is required, bad things happen to them. We’ve just got to figure out how to get the right products in the right way in front of those people…”
John Botica: “For consumers to be confident, to be in control and know when to get advice and how to find it.”
Derek Grantham, FMA: “In broad terms, happy and confident consumers and competent and happy advisers…”