KEY POINTS:
Financial advisory firms, facing tough new regulation, have banded together to give themselves a new voice.
They have formed the Financial Advisers Association of New Zealand, as proposed new legislation governing the largely unregulated sector works its way through Parliament.
The Financial Service Providers Bill seeks to ensure financial service providers are registered and join an approved disputes- resolution scheme, while the Financial Advisers Bill aims to create and monitor standards for advisers.
At present there are no minimum qualifications for financial advisers and no requirement to belong to a professional body. In addition, the industry is covered by a plethora of organisations, each focused on different sections of the market.
The members of Faanz are the Institute of Financial Advisers (IFA), the Society of Independent Financial Advisers, the Professional Advisers Association and the Life Brokers Association.
Spokesman Tony Vidler, who is also on the board of the IFA, said it had been his "baby" to bring some order to the chaos. "I have largely brokered the truce, if you like. They were literally at each other's throats some years ago." Vidler said the Government had made it clear it would lean heavily on the Securities Commission to set standards of competency, and it in turn would liaise with the industry to work out what those competencies should be.
"So there needs to be some sort of representation that's industry wide to be able to have some meaningful conversation about what is acceptable."
In the initial stages of the Financial Advisers Bill it was proposed there should be a model of co-regulation, with the Securities Commission and an approved professional body working together. That has since been abandoned in favour of regulation solely by the commission.
Murray Weatherston, chairman of the Society of Independent Financial Advisers, said that while looking at establishing an approved professional body, the various organisations found they had a lot in common. "Faanz is like a consolidation of the relationships that we built up during that process."
Vidler conceded that the moves towards regulation were cold comfort to investors who had lost money in finance company collapses and the like, thanks to bad advice from financial planners. "The brutal position is this could have been done five years ago."
He said Faanz' focus now was to get as much industry participation as possible and to get other groups such as the Mortgage Brokers' Association interested in joining.
