Under the changes proposed by the Ministry of Business, Innovation and Employment, there will no longer be registered financial advisers, authorized financial advisers and QFE advisers.

Instead, there will be three classifications for those offering advice: Financial advisers, financial advice firms and agents.

Advisers would be accountable individually for complying with legislative and their code of conduct obligations. Agents would be the responsibility of the financial advice firms that employ them.

MBIE said: "There would be no legislative difference in the services financial advisers or agents could provide (but in practice, agents would be limited to the types of advice where the financial advice firm could demonstrate it is appropriate for the firm to hold accountability – for example, advice that is subject to clear processes and controls). The advice that could be provided by agents and the controls around this would be made explicit in the firm’s licensing documentation and licensing conditions."

Agents and advisers would both have to take steps to make sure that consumers were aware of the limitations on the advice they received, and firms will have to take steps to ensure that agents are not incentivised in a way that does not put the consumer first. 

Rod Severn, chief executive of the Professional Advisers Association, said the recommendation effectively gave agents of an institution with no personal professional accountability the ability to offer the same advice as a financial adviser.

He said that was a shift away from adviser professionalism, which fundamentally undermined the purpose of the Act.

“We endorse agents providing advice on their employer’s own products. We also subscribe to the concept of financial adviser firms being able to provide a full range of roboadvice. However, individuals who want to give advice more broadly than in respect of their employer’s products, should be fully qualified financial advisers only. Having competent agents is insufficient: Financial advice is a profession, and the law should encourage and motivate individuals accordingly.”

Robert Oddy, of SiFA, said it was disappointing to see that although the QFE name had disappeared, the concept was very similar. 

David Ireland, a financial services law expert from Kensington Swan, said there was scope for confusion in the definition of agents.

“Agent is a defined term and it is well understood what it means in the sector. But the concept of an agent in this context is a different thing. We will have to see how that plays out. Many people who have the title ‘agent’ will not actually be agents.”

Fred Dodds, chief executive of the Institute for Financial Advisers, said some advisers were wondering where they would fit in the new regime. “I’ve had calls saying where does the CFP qualification lie?”

But he said it was positive that all advisers would have to meet the same requirements, and consumers should end up better off.  “A grey area is what do I have to do to play in the game? If I decide I want to be an adviser in February next year and sell life insurance, what is my hurdle to doing that?”

He said more details would become apparent as the consultation process was worked through.