Regulation
Take a breath – registration deadline is months away
Wednesday 24th of November 2010
One financial adviser waiting for the sole trader definition was distressed speaking to Good Returns yesterday because it takes two to five working days to get the criminal check required for registration and he believed the final deadline was just five working days away.
The Ministry of Economic Development says confirmation on the sole trader definition will be coming out very shortly and is likely to be this week.
Speaking to advisers, there appears to be confusion on registration dates as the December 1 deadline has been pushed to get advisers on the front foot.
However, Securities Commission communications manager Roger Marwick says that date is recommended, the final date for companies and individuals providing financial adviser services to be registered is March 31.
According to the Financial Advisers Act a financial adviser service is:
- Giving financial advice
- Providing an investment planning service
- Providing a discretionary investment management service.
However, if an adviser or its entity provide anything else apart from a "financial adviser service" such as a broking service, foreign currency services, acting as a trustee for securities, trading in money market instruments or shares and other things the individual and/or entity must be registered by December 1.
It is financial service providers that have to be registered by December 1 such as: building societies, credit providers, credit unions, foreign currency exchange dealers, finance companies, fund managers, investment portfolio managers, issuers, money changers, registered banks and some professional trustees and money changers .
Advisers should also be aware that all advisers must comply with the Financial Advisers Act requirement to exercise care, diligence and skill as of 1 December, regardless of whether or not they have registered by that date.
In a nutshell:
1 December:
- All financial service providers must be registered (apart from financial adviser services)
- All advisers (registered or not) must comply with the Financial Advisers Act requirement to exercise care, diligence and skill
- The Securities Commission can authorise financial advisers from this date
31 March:
- Financial adviser service individuals and companies must be registered
- Financial advisers should apply for authorisation if they want their application processed in time for July when the Financial Advisers Act comes fully into force.
Comments (26)
Murray Weatherston
Warning
This advice above applies if the only financial services you provide fall within the definition of "financial adviser services"
If you provide other financial services for example a "broking service" or "keeping, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons" you will still need to be registered by December 1 or you will be in breach of the law.
All this is set out in the Financial Service Providers etc Act, which you can read at www.legislation.govt.nz
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14 years ago
Simon Rule
The Ministry of Economic Development - or as the banks like to call it "Club Med" Great that we will have a ruling on this matter by the end of this week (well we'll see) Personally I'm in no hurry to register in case the people making these decisions on behalf of industry change their mind (again).
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14 years ago
W K
You mean to say after all the confusion, mumbo jumbo, volcanic eruptions, earthquakes, panic and smoke grenade throw all over the place, we now told 1st December is not the dateline for those not in the fund management or forex biz? And still nothing 100% sure about sole-traders? Can the ones in charge please put up your hands, so we can identify you?
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14 years ago
Simon Rule
Well said again w k. To quote another reader on here "the left hand hasn’t a clue what the other hand is doing”. In any other industry the people in charge would have been fired a long time ago.
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14 years ago
Simon Rule
Trevor with regards to advisers/brokers belonging to a disputes resolution service i.e. FSCL what kind of reference checks does your organisation undertake on applicants? I ask because I am aware of a broker who is already a member of a disputes resolution service whom the mainstream banks refuse to deal with for mortgages. As you have pointed out brokers/advisers must belong to a disputes resolution before being allowed to register. Given the above example isn’t it a bit rich to state registration & the new legislation provides protection to consumers?
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14 years ago
W K
re: Trevor, it's biz as usual for me anyway, nothing have changed. I do not intend to sell to clients the dispute resolution provider I belong and have never sold on the basis of the professional body I belong, and those should NOT be the basis of any advisors' biz. Trust, confidence & integrity should be the basis of any client-advisor relationship, and advisors should NOT abuse it.
Furthermore, any conflict of interests SHOULD be disclosed, eg. is anyone from any of the organisations involved in this regulation / dispute tribunal, etc has any conflict of interests (or potential) disclosed?
If anyone disagree with me, you have every right to, those were my personal views.
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14 years ago
Simon Rule
The mortgage broker in question has her name noted as being a member of FSCL on their website. I thought regulation was supposed to get rid of the bad apples?
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14 years ago
Simon Rule
Hi John. So FSCL doesn't see any particular issue then with signing up members who are already barred from dealing with certain banks or insurers??? I can tell you having worked in the industry for the past 15 years if a bank or insurer refuses to deal with someone then there is a VERY good reason for this decision.
Personally as a client I would want the fact that my broker/adviser was not allowed to deal with a particular bank/insurer disclosed to me at the start of my meeting with them (full disclosure) as it speaks volumes about the integrity & character of the adviser sitting in front of me.
Knowing then that this broker/adviser is unable to deal with certain banks/insurers do you REALLY think as the consumer I would want to deal with that individual even with them belonging to a dispute resolution service? No.
Your logic that “having a ‘bad apple’ in a DR scheme is exactly what is needed as this makes the ‘bad apple’ accountable for his/her actions” is in my opinion flawed and the root cause of why regulation has completely missed the mark from its original objective – protecting the consumer.
There is no point defusing a bomb after it’s already gone off but clearly that is what you are advocating with the above statement.
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14 years ago
Simon Rule
Oops! My last post should have started with - Hi Trevor.
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14 years ago
Andy Phillipson
Please forgive my ignorance, but if any old Tom, Dick or Harry is allowed to be part of a RD Scheme without any form of vetting or control, doesn't this new legislation make a moockery of the whole system? I would be worried about belonging to an organisation that accepts anyone, on the basis that legal costs could easily increase to cover the increase in incompetancies.
It seems the same as many other associations out there - they are only a registration vehicle and NOT any form or warranty on the quality or integrity of the members. It seems that we have been given the tools, but some people need more education on how to use them properly. A hammer is the simplest of tools, but not everyone can use it properly!
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14 years ago
Simon Rule
Your 100% right Andy. If the dispute resolution schemes aren't even bothering to screen members then it does make a mockery of the new legislation. Clearly the only people benefiting then are the DR schemes themselves with fee revenue from members NOT the consumer who supposed to the beneficiary in all this!
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14 years ago
W K
Hi Guys, wouldn't it simplify things if advisors were to form an association to perform the duties of a dispute tribunal and screen members? Conditions for the people in charge 1) must have a min number of yrs experience in the biz.
2) no longer in practice.
3) have to be selected / voted in by members to serve a fixed term, they then have to be re-selected and voted at the end of each term to sit in the committee again.
I think if majority think it is a worthwhile proposition, still not too late to propose to the regulators/govt. Just a thought.
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14 years ago
W K
I must add to item 2 - no longer in practice and absolutely no interests directly or indirectly in any financial biz. This is to avoid any conlict of interests.
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14 years ago
Giles Thorman
This whole thing is fast becoming a farce. Rules being changed, dates being moved,claim and counter claim, lots of confusion and it all seems to be being done on a rather ad hoc basis. Any individual who is not going to be trusted by the Public because they have had judgements made against them or agencies cancelled by Banks or Insurance Companies does not need to disclose that to a client simply by becoming an RFA. Furthermore these same unethical people can also register for a DR Scheme (as can everybody by the looks of it) without any vetting and hide behind the semblance of Professionalism this might bestow in the minds of the general public.Furthermore for some reason these same RFA's do not need to give a dollar value to commission disclosure like their AFA counterparts, even though they will be selling EXACTLY the same Insurance polices/solutions...is this just to appease the Banks or am I being cynical? Please note these negative aspects of some RFA's or potential ones is not meant to knock all of them; just note that a number of charaltans are likely to be hiding in your/their midst. So far I can just see a lot of bodies being set up to register people, and then set and mark exams, to listen to disputes, to monitor what we say and do, all at a great cost; most of it I fail to see how it is going to benefit the Public when the back door keeps getting opened to the people we desperately have attempted to throw out of the front one!
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14 years ago
W K
@Giles Thorman - then my proposition (not to sound arrogant) seems better. Because, with people sitting on the committe who were ex-practioners and been in the industry long enough, they will most likely know who the bad apples are, and can turn down their applications. Remember one of the conditions is that they have to be selected and voted in by its members. Unlike the current bunch of dispute tribunals, they will most likely not know many advisors or even been in practice before, and furthermore, they are not selected or voted in by practicing advisors who know the biz and their peers, the good and bad ones.
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14 years ago
Simon Rule
Giles both you and w k make good points. To summarise we have been told time and time again that regulation and training will clean up the industry when in fact all it is doing clearly is adding another layer of bureaucracy with NO benefit to the consumer. Geez does that sound familiar? As another reader on here said previously “can the people who are running this show please put their hands up!” This IS a farce!
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14 years ago
Andy Phillipson
Ok gentlemen - I agree wholeheartedly, and WK - you are not the first to come up with that suggestion, even though it is a good one.
Is it worth having an informal forum on this whole matter and make some path for a more viable proposal now before it gets out of hand, or should we just sit on our hands for now and let the Associations and lawmakers sort out the carnage later?
I for one am reluctant to join a RD Scheme that is a revenue gatherer as opposed to one who is genuinely there for the clients (and let's face it - us too).
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14 years ago
W K
@Andy P - Thanks for your support for my not so original suggestion.
@Regan - If we do it as suggested, probably that particular advisor won't even get a chance to step into the industry. Why let him/her in, make a dent in our reputation, then take him/her to task?
The whole idea of the suggestion is to prevent rotten apples from even practising, who else will know them better other than those who have been in the business for a long time?
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14 years ago
Simon Rule
This is the story of the year as far as regulation goes. Broker who the mainstream banks refuse to deal with allowed to join DR scheme with NO vetting done. As you say Andy there is now a perception that DR schemes are just revenue gatherers.
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14 years ago
Simon Rule
Hi Ron. With the greatest of respect it should not be up to brokers/advisers themselves to report the broker in question to the authorities. If dispute resolution schemes themselves aren’t even going to screen members then to quote another reader the value of such a scheme in the first place is debatable. Without repeating myself there is no point defusing a bomb after it has already gone off.
A simple phone call to the banks themselves by the DR scheme would quickly confirm which brokers aren’t in favour with the banks. This is a pretty good indication then of who the bad apples are in the industry! As any mortgage broker knows a bank would have to have a very good reason not want to deal with a particular broker.
What message does it send now to consumers with regards to their interests being protected (the whole point of regulation in the first place I thought?) that a mortgage broker who the main banks themselves won’t deal with can and does currently belong to a dispute resolution scheme?
Perhaps I am old fashioned but for me as a client knowing that a particular mortgage broker was not allowed to deal with a bank (let alone all of them) would be enough for me to not want anything to do with that individual.
This isn’t a good look for industry. I’m annoyed that the regulators do not seem to have done their homework on something as simple as a compulsory reference check for brokers/advisers joining a DR scheme. Apart from a police check I don’t believe either that the registration process for brokers/advisers seeking RFA status is any more thorough but perhaps a reader who now has RFA status could enlighten us on this?
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14 years ago
W K
An advisor rang me last week, he says he contacted the Companies Office for clarification and was told to consult his lawyer. What???
Does Simon Power actually knows what's happening, or it someone covering the mess up? Can he name the people responsible for this mess, or does he simply have too much on his plate to cope?
Is this "regulation" for all advisors to have to follow a headless chicken?
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14 years ago
alan milton
Wasn't it Groucho Marx who said "I wouldn't want to belong to a club who would have me as a member"
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14 years ago
Giles Thorman
Well how about an "Advisor" who had a sizeable judgement made against them for appalling advise in the last 18 months; details of this appeared prominently in the National Papers, now applying for RFA status (one assumes because of low level disclosure regime), and if not already got it, soon will have. Must have access to Insurance Companies as well for an agency or agencies; what about PI cover? Disputes Resolution obviously not bothered either. Finally whilst I remember, they are also a part of one of the National Groups as well. I suggest that with all of this no-one is really that bothered as long as they can be seen be "getting tough" on rogue advisors. The system is flawed even before it has begun.
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14 years ago
Giles Thorman
Well how about an "Advisor" who had a sizeable judgement made against them for appalling advise in the last 18 months; details of this appeared prominently in the National Papers, now applying for RFA status (one assumes because of low level disclosure regime), and if not already got it, soon will have. Must have access to Insurance Companies as well for an agency or agencies; what about PI cover? Disputes Resolution obviously not bothered either. Finally whilst I remember, they are also a part of one of the National Groups as well. I suggest that with all of this no-one is really that bothered as long as they can be seen be "getting tough" on rogue advisors. The system is flawed even before it has begun.
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14 years ago
Simon Rule
Concerned Advisor I agree. As you say the system is flawed even before it has begun. Perhaps it's up to advisers then themselves to meet with the Minister of Commerce in person and let him know what a waste of time (and money) this whole process has been.
So far from what I have seen to date regulation of the financial services industry has all been about revenue gathering by various organisations all of them keen to take money off advisers.
Given the revelations we are hearing from advisers themselves about people still operating in the industry it appears though that whilst regulation may look impressive to the politicians the actual substance of it is rather lacking.
Regulation of the industry in its current shape and form will most benefit the regulatory bodies themselves NOT the consumer.
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14 years ago
Giles Thorman
Phil,
Is there anyway that Good Returns can act as a conduit for the reservations being expressed?
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14 years ago
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