First some background. The genesis of CoFI is none other than the Royal Commission in Australia which exposed horrendous behaviour by banks and insurers.

In response to that commission the Financial Markets Authority and Reserve Bank used this as an opportunity to examine banks and insurers in New Zealand.

Of course, the New Zealand companies said they have had nothing to hide even though many of them are Australian owned and many of the companies in Australia which ran foul of the commission were run by Kiwis.

Oddly enough since this started significant conduct issues have been found in New Zealand and some pretty hefty fines handed down. Just look at the cases like ones where AIA, Cigna and ANZ all pleaded guilty and ended up paying multi-million dollar fines.

Just to say bad conduct won’t happen here is naïve. We’ve seen it in other jurisdictions including Australia and the United Kingdom and there is no reason why it won’t happen in New Zealand.

The FMA and RBNZ pushed Parliament for conduct regulations giving birth to CoFI.

Here’s the point, if we were to see behaviour in New Zealand like what happened in Australia our regulator has no enforcement powers.

Considering that banks and insurers touch pretty much every New Zealand that leaves the population exposed.

Former FMA chief executive Rob Everett talked about conduct from the day he started at the regulator and the day he left. Getting CoFI through Parliament was one of, if not, his most important goal.

National has offered nothing to fill the void left by repealing CoFI.

You can argue CoFI was over-engineered which is probably correct. Financial services regulators, by habit, have a tendency to over-engineer things – just look at the DIMs regulations.

Then there is the little issue of costs. How much the financial services industry has invested in preparing for CoFi is anyone’s guess. But it’s tens of millions of dollars if not hundreds. As for the manhours – again a huge number.

If CoFI is repealed then you may as well cut the FMA’s head count by 100 people.

How advisers can sing the praises of repealing CoFI probably just shows a lack of understanding – and a certain irony.

Financial advisers are already heavily regulated and have been through a couple of iterations of regulation.

Meanwhile, banks and insurers have had only a light touch. By championing the repeal of CoFI advisers are leaving themselves regulated and leaving the big end of town, as many call it, far less regulated.

It’s rather ironic that the Financial Services Council has not said boo about the announcement – especially as it said at the same conference that the Nats dropped the policy that it was planning to become a lobby group.

What a great opportunity to start being a lobbyist – or maybe they support the policy as its members get off the conduct hook?

CoFI was borne out of what was a horrendous situation in Australia.

The question is if CoFI is repealed who is looking after consumers in New Zealand?

Certainly not the National Party.

PS: What is the thinking behind this policy? It won’t win votes from the banks and insurers as they probably all vote National. If the public believe it will