Bankers slam FMA's KiwiSaver rules
"I'm laughing so hard, it's almost impossible to work. Which is ironic, because for much of the investment community it's now almost impossible to work."
Featured commentThe Bankers Association has slammed new KiwiSaver rules around giving advice to customers, saying it will be harder to make informed choices.
The Financial Markets Authority has released its final guidance note for people selling the retirement scheme and has given them until March 1 next year to implement the changes.
FMA head of primary regulatory operations Sue Brown says there has been concern in the industry about the extent of service which can be provided by people who are not Authorised Financial Advisers (AFAs) or Qualifying Financial Entity advisers. (QFEA)
There are two forms of advice offered:
- Class advice is generic to a group to which the investor belongs, but is not tailored to their particular circumstances. An entity or sole trader providing class advice must be registered for financial adviser services.
- Personalised advice goes further and takes into account an investor's individual financial situation. Only AFAs or advisers employed by a QFEA can give personalised advice about KiwiSaver schemes.
But Bankers Association ceo Kirk Hope told NBR ONLINE this is a bad move for consumers because it limits access to information about KiwiSaver products.
“By limiting who can provide information about KiwiSaver, they make it harder for consumers to make informed decisions. It could also force people to bear the cost of using specialist advisers.”
He says FMA has made incorrect assumptions about the law, and parliament’s intentions, and have ignored all submissions on this point.
“Their insistence that the act includes a concept of implied advice is not correct. We don’t object to what they’ve done because it doesn’t suit us. It’s because they’ve gone beyond their powers, plus they’ve got it very wrong.”
The changes prohibit bank tellers, mortgage brokers, financial service employees and KiwiSaver commentators from giving their view. Information must be factual and able to be independently verified and must not include any opinions or recommendations in relation to acquiring or disposing of the product.
For example, a bank teller can only supply a client with information about the fees of their KiwiSaver scheme and the lock-in period for a particular portfolio, while a mortgage broker must be clear they cannot give any views on whether or not KiwiSaver is a good idea.
Only very limited and basic information can be provided without it being deemed to be providing financial advice.
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Comments and questions6
You cant trust bankers that is why rules have to be made
Too much self interest
I'm laughing so hard, it's almost impossible to work. Which is ironic, because for much of the investment community it's now almost impossible to work. All good I guess, we don't need to worry about risk this Christmas, all wrapped up by Daddy FMA like little children. Mind you, nothing worth left to invest in either.
If politicians are in power, and bureaucrats rule, then buy gold. There you go FMA: sue me.
The price of regulation!!
Unfortunately whilst the employees of the FMA may be well intended I can say from experience they just do not understand the financial services sector and have their own entrenched ideas on how we should all work without having had actual experience in the relevant sectors - and do they understand what service delivery is all about - no way! Enjoy your next audit which is your opportunity to continue educating the FMA.
if the finance sector wasnt so dishonest you would not need regulation
The FMA has just completely lost the plot, in just about every area of their operation. Must be time for deregulation which normally follows this stage of absurdity. Less than 1% of New Zealanders lost money in the finance company collapses so these bureaucrats design an entire regulatory system around that and in the process stifle innovation, efficient allocation of capital and common sense. The impact of all this global regulation is holding back growth in the economy. The politicians will come to their senses shortly.
If you go to the heart of this , The FMA is making a distinction around Advice and when is it tailored to an individual, then it is deemed to be Financial Advice.
Given that most kiwisaver converstaions are started b y the Adviser or QFE employee and that they are usually one on one then its fairly hard to move away from the expectation that the Adviser/QFE employee is not giving the impression to the buyer that they are not receiving advice.
Instead of balming the FAM, perhaps the institutions that feel offended could change their methods, upskill staff to AFA status as required and increase their people available.
Sure it costs money, however if they are serious about being Kiwisaver providers and they want to secure the realtionshiip over a long term when Kiwisaver funds will be alot bigger than now, then it could well be money well spent.