FMA moves to help KiwiSavers

ELOISE GIBSON
Last updated 17:45 26/07/2013

Relevant offers

Money

High dollar keeps lid on inflation rate Shoebox apartments 'good' for Auckland Tower's track and reward driver app Clearance grocery chain growing Kiwis can't get enough of Easter treats Council rules boost property prices: English A $7500 wage rise by 2018 on the cards Fraudster jailed over mining job scam Glitches offshore for smartphone stickers Growth this year could be decade's best

The Financial Markets Authority is trying to encourage financial advisers to give cheaper independent advice to KiwiSavers with a new compliance guide.

A consultation paper out today suggests advisers can help people who don't want to pay big money for advice to make basic financial decisions, such as what risk level is best for them in their choice of KiwiSaver fund or how to pay off debt.

The pool of people who can supply full, personalised advice on complex financial products such as KiwiSaver has shrunk to about 2000 after measures to toughen up on the advice industry were introduced following the spate of finance company collapses.

Advisers and savings advocates have expressed concern that the raft of new rules and regulations might stop advisers helping people who want basic help without paying high fees.

KiwiSaver pays less lucrative commissions than some other products, such as insurance, and inexpensive commission-free advice has been difficult to come by.

The FMA paper suggests a list of steps and disclaimers advisers can follow to give basic help without breaking the law, including sample scripts for dealing with people who ask for advice on issues such as using KiwiSaver to buy a house.

It wants feedback from advisers by August 15.

The FMA plans to publish three new guidance notes explaining its expectations for authorised financial advisers (AFAs).

But it said the notes would not change the legal requirements of the Financial Advisers Act 2008 and the Code of Professional Conduct.

Advisers' concerns came through the FMA's 2012 survey of AFAs where they said they wanted to be able to provide a streamlined or "simplified" advice model to lower value clients, or for simpler transactions, without the full compliance burden and fee scale of a full personalised advice or investment planning service.

"FMA's own monitoring and surveillance activities reinforce the concern around access to advice. Advisers are often unclear about the paperwork and compliance requirements [and] ... frequently authorised financial advisers translate the requirements of the act or the code into an unhelpful level of additional paperwork to 'cover all the bases'. This adds to the costs of providing advice services, and clients often have no interest in reading it," the FMA said.

It has been increasing its enforcement focus on financial advisers and other industry players as the finance company prosecutions wind up.

Four advisers, including alleged Ponzi operator David Ross, have been referred to the Financial Advisers Disciplinary Committee, the Financial Markets Authority-funded independent body headed by former Court of Appeal judge Sir Bruce Robertson, for hearings next month. 

Ad Feedback

- © Fairfax NZ News

Special offers
Opinion poll

The 50c increase in the miminum wage is:

Fair

Not enough

Vote Result

Related story: Minimum wage up 50c

Featured Promotions

Sponsored Content