Changes on horizon under new government

As predicted by polls, Saturday’s election results left National in a position to form a government with the support of ACT and potentially NZ First.

During the election campaign, it promised a number of changes that could affect the financial advice and funds management sector, including the repeal of CoFI, winding back CCCFA amendments, changes to allow KiwiSaver members more than one provider and allowing young people to use their retirement savings to pay a rental bond.

Some in the sector are understood to be hoping ACT’s focus on lighter regulation could lead to a change of approach at the Financial Markets Authority.

Financial Advice New Zealand chief executive Katrina Shanks said it would be preferable to tweak CoFI, particularly around the rules for incentives paid to financial advisers.

She said the intent of the law was to limit the restriction to volume and value-based incentives, but the regulations had widened that.

“We believe it has been too far widened and we would like to see that reduced further, to the intent which was volume and value-based incentives only. In terms of the principles of CoFI, we are very supportive of any legislation that endorses good conduct and culture within the sector.”

Rupert Carlyon, founder of the Koura KiwiSaver scheme, said he did not expect the repeal of CoFI to make a big difference.

But he said if there were changes to the anti-money laundering rules, as National’s commerce spokesperson Andrew Bayly had indicated was on the agenda, that could be significant. “That’s a bug bear for a lot of people that adds complexity.”

He and other KiwiSaver providers said it would be better to conduct a full review of KiwiSaver than implement tweaks that could dent confidence in the scheme.

The Financial Services Council said it looked forward to working with a National-led government to pursue policy to build New Zealanders’ financial wellbeing.

“It is time for some fresh thinking and innovation with KiwiSaver. It has been a huge success for Kiwis and now is the time to capitalise on that success,” chief executive Richard Klipin said.

“The recent news of KiwiSaver funds reaching the $100 billion mark shows the time is right for a detailed review to ensure we get the best settings in place and ultimately further grow financial confidence.

“The collaboration and innovation should not stop there. We support efforts to strengthen New Zealand’s health system to ensure all Kiwis get access to quality healthcare. The financial services sector is ready to look for innovative and pragmatic solutions and to help relieve pressure on our stretched health system.”