It’s been a week since MBIE released its controversial consultation paper.

Most contributions from both advisers and commentators have focussed on the difference (or lack thereof) between the terms financial advisers (FAs) and financial advice representatives (FARs).

I’m as stumped as anyone as to why MBIE would propose now to insert the word "advice" into the role of "financial representative" when they describe the role as a non-adviser (page 18).

From a competence and qualification standards perspective, the public would assume if they have the word advice in their title that these employees would have to be qualified in financial advice. It seems unlikely this will be the case.

On the matter of standards – you may have missed it – but MBIE seems to have little appetite for supporting a requirement for FARs to be qualified. They point out that “a financial provider may elect to meet the standard through other means – for example , run in-house training courses and provide support/controls that means that their advice meeting minimum standards of competence.” (page 38)

I’m surprised MBIE didn’t mention opening up that solution to other organisations such as educators and professional bodies.

A key plank of the Financial Adviser Act is that all advisers must have the competence, knowledge and skills to complete their job. However, the MBIE focus in this latest draft seems to be on standards of competency. That is, applied demonstration of skills and expertise in the role.

Okay, competency in the job is absolutely vital.

This is demonstrated through CPD and ongoing training. I’ve little issue with MBIE’s solution for demonstrating competence, but where is their solution for the current 6500 RFAs and 26,000 QFE advisers to meet their knowledge standards?

To their credit MBIE describes well the NZQA process of Recognition of Priority Learning (RPL) as an option for demonstrating competence (page 50) – but its seems very unclear from their paper whether they realise a key outcome of a successful RPL process is the achievement of a qualification.

One thing is certain. We are moving further away from the education standards set for the Australian financial advice sector. I think it’s a national scandal that the New Zealand financial services sector still allows for a largely unqualified workforce (AFAs being the shining exception).

Sadly, the biggest losers here, besides the public’s low confidence in an unqualified workforce, are surely the large numbers of financial services employees who will, into the foreseeable future, lack portable qualifications on their CVs.

But in 2017 does this really need to be the case? International standards in financial advice knowledge are described for over 26 jurisdictions worldwide by the Financial Planning Standards Board – standards articulated locally in Massey University and ARA Institute’s qualifications. New Zealand’s current minimum requirement, for the near future, seems to be set at the NZQA level 5 New Zealand Certificate in Financial Services – this also clearly articulates the knowledge standards for NZ financial advice: that is Core Knowledge, Financial Advice and seven specialist knowledge strands. It is fit for purpose.

It will be interesting if MBIE’s idea of "in-house training courses" (page 38) morphs into properly-moderated, resourced, industry-training programme under the guidance of Skills Org, the sector’s industry training organisation. If so, this would lead to large-scale completions of the level 5 minimum qualification. What is vital is that any future provider training needs to be linked to the NZQA standard so their employees have their skills and competence recognised.

If this happens, this would provide significant gains in consumer confidence in the long term and importantly, better outcomes for QFE employees and their career prospects into the future. It’s a watershed moment for MBIE – can its review lead to a "more informed and confident consumer" and also meet the longer-term strategic aims of the NZ Tertiary Education Strategy and the Industry Training Act?

* Andrew Gunn Manager, Member Learning & Development IFA

Disclosure: Gunn is also a director of Skills Active Aotearoa Ltd (ITO for Recreation, Sport & Fitness), and Professional IQ College Auckland