An Auckland forum to discuss the FAA review options paper was hosted by the Ministry of Business, Innovation and Employment and the Financial Markets Authority yesterday, and was booked out.

It is to be followed by further events in Wellington and Christchurch.

Attendees were asked to discuss aspects of the review and of the suggestions proposed in the recent options paper.

That included whether all advisers should be required to hold a minimum qualification, undertake CPD, work to the same ethical standards and whether they should be licensed at an entity or individual level.

Some attendees said advisers should all be held to the highest qualification standard if they were managing client money. But others questioned who would pay the costs associated with that and said it would be better to have different levels of competence required of advisers depending on what they were doing.

Former IFA president Nigel Tate said there should be a common competence standard for all advisers, of the level five qualification, and a single type of CPD required. “Most RFAs would meet the level five standard now,” he said.

Adviser Ron Flood said he had only opted not to be authorised because it had no value to his business. “A lot of [non-authorised] advisers have the competency, skills and qualifications.”

There was support for the Code of Conduct for AFAs’ ethical obligations being applied to all advisers but some questioned whether people working for a particular provider could struggle to balance the conflict of interest requirements with the needs of their own employer.

The role of professional bodies was also questioned – it was suggested that one body would be better placed to monitor and act for advisers in the industry rather than the eight currently operating. PAA chief executive Rod Severn hinted that was something that the associations were discussing: “We’re all talking.”

Flood said it was important that if entity licensing were considered, there was a way to also track the advisers working within that entity. He said a big problem with the Australian system was that there was no transparency about who was working for big firms.

Compliance expert Angus Dale-Jones questioned whether entity licensing would be harder on smaller firms. He said a possible solution was to license each adviser individually when they first joined the industry and then allow the businesses they worked for to handle ongoing monitoring.

Tate questioned whether entity licensing would make it harder for advisers to move within the profession.

Almost all attendees said the suggestion of “expert financial advisers” who could handle particularly complex matters, as outlined in the options paper, would just perpetuate existing problems of registered versus authorized financial advisers. Tate said the use of the word “adviser” should be restricted.

The issue of sales versus advice was discussed, and concerns were expressed that if sales was exempt from the FAA, consumers might not understand the people they were dealing with were not offering "advice". Severn said transparency and disclosure would be vital.

The FMA’s principal consultant Derek Grantham said the session’s feedback had been useful.  He said there was a danger of assuming that systems that had worked in a certain way in other countries would operate the same way here.