Bankers slam FMA's KiwiSaver rules

The 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.