Loading ...Our latest poll result indicates that while a majority of advisers don’t agree with the FMA’s focus on monitoring the advice sector regarding conflicts arising from risk commission structures, a sizable minority do think it’s the right move.
As we go to press a solid 60% of advisers disagree with the FMA’s focus on monitoring the advice sector given the regulator says it continues to receive reports of misconduct motivated by high upfront commissions. But more than three in 10 advisers (33%) says it’s the right move. Another 6% are not sure.
Our poll question arose from the FMA’s Financial Conduct Report which sets out its regulatory priorities for the 2026-27 financial year.
These include a focus on managing conflicts from remuneration structures in the financial advice sector (see: Risk Commissions Under Regulator’s Spotlight) along with fraud detection and prevention; use of complaints data to drive improvements; and digitisation opportunities (such as AI) in financial advice.
With regard to managing conflicts from remuneration structures, the FMA said it would focus on “…ensuring financial advice providers have effective processes and controls in place to manage conflicts of interest arising from commissions, and to detect and deter misconduct that may be incentivised by commission-based relationships.”
…The financial advice regulatory regime provides the framework to ensure clients’ interests are prioritised, but we continue to receive reports of misconduct motivated by high upfront commissions…
As to why it has this remuneration focus, the FMA report states many FAPs and financial advisers are remunerated by commissions and while it recognises that commission-based models can improve access to advice, these carry risks for consumers that need to be managed.
“The financial advice regulatory regime provides the framework to ensure clients’ interests are prioritised, but we continue to receive reports of misconduct motivated by high upfront commissions.“
It’s aware of instances of unmanaged conflicts leading to poor or unsuitable advice, inappropriate replacement business and fraudulent activity.
The FMA also says it’s aware “…of high upfront commissions for financial advice across life, health and disability insurance products, and KiwiSaver, which increase the risk of consumer harm. We also see inconsistencies in how advisers disclose ongoing (servicing) commissions.”
Our poll remains open for another week and we are keen to learn your views…