New Zealand’s Financial Markets Authority has launched its own review into financial advice accessibility, bearing similarities to Australia’s own Quality of Advice Review.
At the Financial Advice New Zealand conference in Christchurch last week, Financial Markets Authority (FMA) chief executive Samantha Barrass revealed the regulator would be commencing a review of the financial advice sector and access to advice.
The FMA review centres on outcomes-focused legislation, which Financial Advice Association Australia general manager for policy Phil Anderson says was very much the intention of Michelle Levy who led the review in Australia.
“At the core, the objective [of the QAR] was to improve access and affordability of financial advice,” he tells Professional Planner.
Tangelo Advice Consulting principal Conrad Travers says the QAR was far broader than accessibility and calls it “a fantastic piece of analysis” that had many positive recommendations.
“It was born of many of the issues our industry had faced and asked a broader question regarding the regulatory settings, including but not limited to accessibility,” Travers says.
“The FMA review is more positive, hopeful and forward looking, but NZ has the advantage of having a lot less prescription in its financial services law, so can move with greater speed sadly.”
The review aims to help identify unnecessary regulatory burden to improve availability of advice – in effect, reducing the amount of regulation.
Financial Advice New Zealand CEO Nick Hakes says the review is looking for potential barriers to Kiwis being able to receive advice.
“If we understand there’s some barriers, then the industry can respond positively, and ultimately, we want more Kiwis to go and seek qualify financial advice,” he says.
“The perceptions of the advice profession and advisers are strong, and we’ve just come from a period of working through new regulation.”
‘Less prescriptive’ across the ditch
Anderson says New Zealand’s financial advice industry is much less prescriptive than that of Australia, allowing for a more collaborative regulatory environment.
Travers says New Zealand’s advice industry has “the advantage of having a much simpler regulatory environment”.
“[They have] a more open and collaborative relationship with the FMA versus the approach in Australia which, for a whole variety of reasons, seems confusing and complex, with an excess of seven regulators,” Travers says.
Anderson agrees the financial advice industry in New Zealand has a higher level of constructive collaboration with its regulator which is beneficial for both.
The FMA review shows a commitment to the industry to build a better understanding of where and how the regulator should focus its regulatory efforts and ensure outcomes-focused regulation, which the FMA described as “not regulating for the sake of regulating”.
Anderson says Australian regulation doesn’t have the same level of flexibility as it is much more prescriptive than the FMA.
“It’s a much more measured approach, and it’s much less prescriptive and bureaucratic,” he says.
Travers says he believes it should be “incumbent” on the industry to see what there is to learn from New Zealand’s approach to regulation, and vice versa, for the ultimate benefit of the client.
The FMA’s regulatory returns data revealed as of June 2024, New Zealand has 1410 licensed financial advice providers and 8472 advisers, but the number of advisers also includes mortgage brokers.
Hakes says all advisers, including mortgage brokers, and sit under the same regulatory umbrella.
QAR’s successes
After Levy’s review was completed at the end of 2022 and after industry consultation, the government announced its response, with Minister for Financial Services Stephen Jones announcing that 14 of the 22 recommendations would be adopted.
This led to the Delivering Better Financial Outcomes reforms, with Tranche 1 legislation being passed in July 2024.
Jones released Tranche 2 draft legislation last month, excluding any reforms about Best Interest Duty and the proposed new class of advisers.
The draft bill revealed the proposed eradication of onerous Statements of Advice with the new Client Advice Record, which has sparked a mixed reaction from the industry.
