Act not serving consumers

John Hawkins, chairman of the New Zealand Shareholders Association, said one of the biggest problems was the system of RFAs, AFAs and QFE advisers.

He said the vast majority of consumers would not know that the different adviser designations meant, nor what they could advise on, or the limitations of their advice. “Some are no more than glorified sales and that is an area that needs to be cleared up,” he said.

Another problem was that it was very time consuming to sign up for advice. “People with modest amounts of money find it hard to get an adviser to give them specific advice catering to their situation because they do not have enough money to make it worthwhile for the adviser to spend the time. We have a situation where the administrative complexities of the regime are reducing choice.”

Many advisers had responded to the regulation by  shutting up shop, or choosing to amalgamate with a larger group.