The FMA's monitoring of advisers has been a hot topic in the industry for some time, and the feedback has been generally positive in terms of how the regulator has approached the exercise, which it acknowledges some AFAs were nervous about.  The initial findings are largely positive for the industry.

Importantly, while it has identified some areas where there is room for improvement in terms of processes, the FMA has found that the behaviour and ethical standards of AFAs it has visited has been top-notch.  This is a good sign for the future of the industry, which hasn't traditionally had a great reputation among the general public.

Meanwhile, the number of lawsuits against financial advisers is dropping, but a lawyer has warned that this isn't all good news for advisers.  This is because of the lack of case law, which for instance means the industry essentially gets stuck with the controversial Armitage v Church judgment.

While there are undoubtedly many benefits to the dispute resolution scheme model, there is a downside to having disputes kept confidential.  Cases such as Armitage v Church give useful pointers for advisers both in terms of what to do and what not to do.  Keeping things behind closed doors removes this useful feedback.

One of the areas the FMA has identified as needing work by AFAs is around personalised advice.  One aspect involved in that is risk profiling, which one expert has said needs more than just "astrology" to be adequate.

Establishing an accurate risk profile is crucial for the adviser but also for the client.  It enables the client to understand investment allocation decisions better and makes them feel like they are part of the process rather than just being told what they should be doing.  It also makes it harder for them to turn around and complain about the advice they were given.

There were a couple of stories relating to personnel changes this week.  BNZ's long-awaited KiwiSaver scheme still hasn't arrived but its private banking boss Tracey Berry has handed in her notice; meanwhile, there is speculation OnePath could be facing further changes as a result of what is happening in ANZ Wealth across the Tasman.

And Perpetual has placed its Mortage Fund in moratorium after publicity over an FMA investigation into related-party loans prompted a run on the fund.

In insurance news, Accuro boss Bruce Morrison has called for government health insurance incentives for the elderly.  His advice to follow the Australian model is a sensible one, particularly given New Zealand's woefully low health insurance coverage.  

And in mortgage news, Kiwibank has bought the rest of advisory firm New Zealand Home Loans.  The NZIER has predicted the OCR will stay on hold for some time; however, the link between the OCR and floating mortgage rates has weakened in recent years.