The regulator has issued a second consultation paper on the proposed reporting requirements for authorised financial advisers, including an updated version of the information return.

The return is a detailed questionnaire running to more than 20 pages that asks for information about the adviser and their business.

One of the least popular aspects of the original draft were questions such as “what was your gross income from financial adviser services for your last completed tax year” and for details of how the adviser’s income level had changed, year on year.

Adviser Carey Church made a submission:  “What is the purpose of requesting information on my personal income from financial adviser services? What is this information going to be used for? What is the precedent for requesting this information? My personal taxable income and share of the profit from my work is personal and confidential information."

SiFA agreed with her: “There is no other regulated profession or occupation in New Zealand of which we are aware where individual participants are required to notify their incomes to the regulator. This question generated the strongest negative response from surveyed AFAs.”

But in the latest draft of the return, those questions have been removed. It still asks for details of any “benefits” that advisers have received from providers, such as training, entertainment, travel or tickets.
Church said she was impressed that the FMA seemed to have considered the industry’s response. 

“I’m really impressed with the fact that they’ve obviously noted the feedback and adapted it a lot, it’s more user-friendly but there are still some areas that will be difficult for practitioners to fulfil.”

Submitters suggested it could take anything from a day to two weeks to accurately fill out the return, which asks for everything from details of their revenue by advice type to details of reporting to clients.

SiFA also had concerns about the significant time and expenditure that would be required to collect previously unrequired data.  It said some of its members had indicated they would need new CRM systems to track the information.

Some of its members were worried that further compliance requirements could push what was expected of AFAs to the level where it could only be managed by institutions.

Former chairman Murray Weatherston said increasing regulatory requirements could drive more advisers away from the sole practitioner model.  “One take on that was that it was the intention of regulation anyway.”

The Institute of Financial Advisers also submitted that it was concerned that the reporting requirements would be an added burden for advisers.

President Nigel Tate said it was disappointing that the newest version still required annual submitting on September 30, instead of alongside other required reports or reauthorisation. “I would rather it was done in concert with other requirements, to reduce complexities.”

He said it would make sense if the return was tied in with the submission of ABS documents and CPD plans. “If this could have been done and able to replace these other things, it would be a positive move.  If this is just another separate thing to be done, that’s an issue.”

Banks also made submissions – ANZ suggested AFAs within a QFE be exempt from the requirements, or for there to be a separate return that would reflect the QFE model. The return has been redesigned so that advisers in a QFE do not have to answer questions that are not relevant to them.