The adviser group has made a submission to the code working group’s consultation process, as part of the development of the new code of conduct for all financial advisers.

The SiFA submission says it is speaking up for the small advice firms that will make up the bulk of license applicants under the new regime.

SiFA chairman Murray Weatherston and consultant Robert Oddy said small advice firms seemed to have been neglected.

“There are a large number of things in your paper you believe an organisation might or should do. Our question to you is this – if a sole adviser practice or small practice did all this stuff, how much time would be left to actually see clients? That abstracts from all the other regulatory imposts that we face elsewhere as advisers from AML, ABS, CPT plans and so on.”

Their submission takes issue with most of the group’s proposals – right from the assertion that “good advice outcomes” should be an overarching driver for the code.

Weatherston and Oddy said the public would hear that phrase and assume it meant that the product that was advised on performed well – the precise interpretation the working group said it wanted to avoid.

“We were at the Auckland consultation and our assessment was that the concept was thoroughly trashed – without any contribution from us.”

The working group has laid out a plan for separate qualification and competence requirements of advisers dealing with product advice and those offering full financial planning.

But Oddy and Weatherstron said many RFAs would be caught in the financial planning realm, though they did not yet realise it. As the proposals are currently worded, that would mean they would need a degree and level six diploma.

“The people who do product advice solely will be salespeople, pure and simple,” Oddy and Weatherston said.

“We believe your product advice/financial planning distinction is actually a euphemism for sales and advice. The biggest fraud that will be perpetuated on consumers is that when a VIO says that it is providing advice, it will actually be engaging in nothing more than sales activity."

Submissions close at the end of the month.

The pair said they had feared the working group would go soft on the qualifications required of RFAs. Instead, it had recommended tougher qualifications than were needed.

“Your proposal to give a free pass to AFAs into the new regime is welcomed. Your proposal to make everyone else have a degree and perhaps level 6 are crazy.

“There is no degree in NZ for life insurance, or mortgage broking, or investment advice, or general insurance advice, or trustee services advice So the degree being talked about is not a vocational degree like lawyers, accountants doctors dentists engineers surveyors et al are required to hold to get recognised in their respective professions.

“Talk about a degree sounds fine and dandy – in Australia advisers will need one, but they do have degree programmes that cover the financial advice disciplines. Are you seriously saying our 'mom and pop' 'kitchen table' insurance agent needs a degree? Baloney.”