In the Law Society’s submission on the Ministry of Business, Innovation and Employment’s Financial Advisers Act Options Paper, president Chris Moore said more work should be done to identify the benefits of amending the Financial Advisers Act to establish a sole professional body for advisers.

“A professional body could be responsible for licensing financial advisers and regulating conduct through setting and enforcing a code of conduct.”

He said that association could co-regulate with the Financial Markets Authority (FMA). The FMA would have an oversight role but the day-to-day discipline of advisers would be up to the association.

“It would be important to ensure the boundaries between the professional body and the FMA were clearly established.”

It follows calls from the Institute of Financial Advisers and Professional Advisers Association for a greater role in the industry.

The Law Society also argued the options paper seemed to miss a lack of perceived value as a barrier to consumers obtaining advice.

“Because this barrier has not been identified, the Options Paper looks to increase professionalism through processes, such as passing exams or applying for licenses,” Moore wrote.

“Professionalism comes from belonging to a profession. Good culture cannot be imposed by a regulator but must be owned and developed by that profession. The professionalism advisers and the public’s recognition of that professionalism are critical to achieving the outcomes of the review.”

Moore said consumers would be more likely to value advice if they understood it was separate from sales and was provided by professionals.

“Much sales activity is given the cloak of ‘financial advice’,” he said.

“Distinguishing ‘financial advice’ from ‘sales’ will enhance the reputation of financial advice and the professional standing of financial advisers. Allowing a properly regulated sales channel would also enable the wider distribution of basic financial products, provided such products were suitable for the customers.”