Thursday 17th of June 2010

If you ever wanted an example of how not to introduce regulation look no further than what’s happening with financial advisers. The current process is a joke, is poorly conceived and is wasting the time and resources of everyone in the financial services sector. The problem, in my view, can be clearly sheeted back to one fundamental issue. There is no clear idea of what the regulations are trying to achieve. You just need to look at the preamble in the latest bills to emerge from the Commerce Select Committee last Friday. As I have asked previously, will all this extra cost and regulation really ensure the public get better and more accessible financial advice? The answer is no. This government is building bureaucracy, increasing the size of the public service, adding costs to industry and providing insufficient benefit to investors. It is not what National promised to do. My sympathies are to many people: advisers and firms trying to do the right thing; education providers and others rushing to get the necessary services to market, but also to people like Angus Dale Jones at the Securities Commission. Who would envy his job, with the politicians and officials rewriting the script faster than he can learn the words. The latest news this week that insurance advisers and mortgage brokers won’t be allowed to become Authorised Financial Advisers is ludicrous. Many I have spoken to say they have started along the path of upskilling and want to keep going, even though they don’t have to. Good on them, I say - but now they aren’t allowed to be AFAs. It seems politicians and officials still don’t know what they are trying to achieve. The buck ultimately sits with Commerce Minister Simon Power. I’m not an adviser, but if he wants some advice, it’s this: Take a tea break; work out what you are trying to achieve and how it will help investors and extend the time lines. Take the time to get regulation right, rather than rush it through urgency in Parliament. Code Committee chairman Ross Butler said a week or so before the select committee report came out that when it did the s**t would hit the fan. He was so right.