The select committee reported back on the bill this week, recommending it be passed with amendments.
But some industry commentators, including Financial Advice NZ chief executive Katrina Shanks, said it missed an opportunity to clearly demarcate the difference between sales and advice.
Consultant David Whyte, who has previously held management roles in AIA and AIG, said consultation had been a waste of time, effort and money.
“The Select Committee never had any intention of considering the serious issues raised in the submissions presented.”
He said, while more than 30% of submissions asked for a clear line between sales and advice, and between product provider salespeople and independent advisers, the committee had chosen to ignore that conflict of interest.
“The failure to address this issue creates a fundamental disadvantage for consumers. The Select Committee recognises that advice can be provided by an individual who has access to only one single product.
“In one brief statement, the financial services industry is both ‘dumbed down’ and catapulted back to the last century when tied agents dominated the distribution scene.”
He said FSLAB would allow pushing a product on behalf of an employer to be called advice.
“[It] consigns the Certified Financial Planner to the same level as the spotty-faced bank clerk who has NCEA as a qualification. The pathway to the much-criticised concepts of ‘product advice’ and ‘in aggregate’ compliance is now wide open for the CWG to include in the Code of Conduct. This will be the nail in the coffin of consumers’ ability to identify clearly and unequivocally on whose behalf a financial intermediary is acting.”
The changes recommended tightening the scope of nominated representatives working for financial advice providers, but did not tackle the key question of separation.
The committee recommended that non-QFE groups also be allowed to engage nominated representatives while they had a transitional licence. Previously, this had been restricted only to existing QFEs. The committee said this would allow providers to keep offering equivalent advice while subjecting them to the conduct and care duties of the new regime.
