Dr David Clark, Minister of Commerce and Consumer Affairs (among others), opened the Financial Advice New Zealand annual conference yesterday providing delegates with his vision for the financial services sector and an update on how the new regime is operating.
Clark says he is well aware that some in the industry are struggling to come to terms with the changes implemented over the last few years and have concerns about impending legislation such as the Financial Markets (Conduct of Institutions) Amendment Bill (CoFI) and consumer data rights but is confident the Government has got the balance right.
"The intention is not to interfere with the provision of financial advice but to ensure providers are working in the best interest of consumers," he says.
Clark wants the sector to work together for the financial well-being of all New Zealanders and says financial advisers are critical to the process.
"Your mahi (work) is needed now more than ever...you play a critical role in communicating about money, financial literacy and building on common goals.
"It's critical the financial sector comes together to protect the most vulnerable."
Clark says there are many people in New Zealand struggling to make ends meet and this could get worse with rising inflation.
He points to recent statistics regarding the rising number of people applying for hardship withdrawals from KiwiSaver accounts who are essentially using their retirement savings to solve short-term financial distress.
In response to a question from a delegate about the Credit Contracts and Consumer Finance Act (CCCFA) changes and how the major banks have become increasingly conservative in approving home loans, Clark says the point of the legislation is to stop people taking on debt they can't afford to service.
"We are seeing banks being more cautious....inflation is popping up so protections and good advice are important."
Clark also praised the FinTech sector saying the introduction of consumer data right legislation will help the sector "take off" but there was also "risks and apprehension" when it came to buy now-pay later schemes.
He says a discussion paper on the pros and cons of buy now-pay later will help to regulate that sector in future.
He says FinTech is a fast-growing and evolving industry empowering a huge wave of finance and investment tools, such as Sharesies and Hatch, and that New Zealand had jumped 15 positions to number 30 in the world in terms of the use of FinTech by consumers.
Clark says more time and effort will be invested into aligning the various dispute resolution schemes allowing better access to justice for consumers.
He says the new licensing regime has progressed relatively smoothly and encouraged delegates to engage with the Financial Markets Authority and get their licences in place.
"We will find the system will find its own place and rhythm over time but there will be a period of adjustment."