Financial Markets Conduct Bill needs to change - IFA

25 June 2012

Financial Markets Conduct Bill needs to change - IFA

Reflecting considerable industry disquiet, the Institute of Financial Advisers (IFA) chief executive Peter Lee told the Financial Markets Conduct Bill select committee hearing last week that one clause in particular has to go.

Clause 71 prohibits offers of financial products as a result of an unsolicited meeting, except in very restricted situations such as to existing clients.

In its submission, the IFA pointed out that, under a reasonable interpretation of the clause, it would be impossible for an adviser to gain new clients. “Clients do not in general contact an adviser,” says the IFA. “As it’s now proposed, no adviser would be able to approach any prospective client because it will almost certainly result in a sale further down the line”.

Lee told the select committee that the FMC Bill was always meant to be a companion piece to the Financial Advisers Act. “Advisers are already pretty well regulated.”

“As the clause is written it doesn’t matter how many meetings you have. If the first one was unsolicited then you can’t offer products”. Asked if this meant advisers would be able to recommend but never sell in such cases, Lee replied, “that’s our interpretation of it”.

In answer to a question about the future of the clause, Lee told the committee “scrap it. It doesn’t make sense when you’ve got the Financial Advisers Act.”

The IFA also queried in its submission why “quoted securities” were exempted. “Why should an adviser offering shares be exempted, when the same adviser offering the same shares via a managed fund would be caught?”

ENDS

IFA Vision
To be recognised as the professional body for financial advice in New Zealand

IFA Mission
To help our members reach their full potential to deliver professional, quality financial advice
to New Zealanders
.
IFA Background
The Institute of Financial Advisers is the professional body for some 1,000 members, representing financial advisers in New Zealand. All members are individual members, not corporate members. We estimate that our members provide advice to some 200,000 New Zealanders each year, many of whom would be couples rather than individuals, with an overall client base of around 600,000.
Our members provide advice to their clients in the areas of insurance, investments, financial planning, work-based savings and insurance, retirement planning, estate planning and financial services generally. Their professional practices reflect the broad spectrum of New Zealand businesses – they operate as local SME’s, are part of large regional or national dealer groups, are associated with strong financial organisations, services companies in banking, funds management, or insurance, work in employee benefits organisations, or sometimes practice as lawyers, accountants and other professional advisers.
The Institute reinforces compliance with a code of ethics and practice standards, runs a Professional Conduct Committee and Disciplinary Tribunal that are independently chaired, offers education pathways that can lead to professional designations and the attainment of internationally recognised adviser marks, maintains and ensures compliance with a continuing professional development programme, and provides networking, education, development, and business practice forums at a national and regional level for members

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