Inside Money: Regulation the banks can swallow

Simon Power. Photo / Mark Mitchell

Everything comes to pass, even the Financial Services Providers (Pre-Implementation Adjustments) Act, which as this release from Commerce Minister Simon Power notes was carried "unanimously" on Wednesday.

The legislation, which is an attempt to tidy up the dirty little messes left behind by the Financial Advisers Act and the Financial Services Providers (FSP) Act, is slightly late.

But, to be fair, in the entire history of this latest bout of financial services reform is littered with missed deadlines.

Check out page 31 of this submission on the Financial Services Providers Act by a bank I picked out at random (ANZ scores again) for a great timeline, showing exactly where "critical dates" in the process were Not met.

It's been an extraordinary muddle, further proof if you want it, that the government (and the previous Labour one) had little idea of how the financial services business works and what they wanted to achieve in reforming it.

The latest version, which significantly scales back the number of financial players caught by the full force of regulation, is merely a concession to administrative reality.

While it has caused confusion and angered plenty of advisers who had spent money and time starting on the path to compliance, the FSP amendments - just maybe - make some sort of regulatory regime achievable by the middle of next year.

Read the ANZ submission and it will become clear the banks' arguments have won the day. In its submission, the ANZ says if the law wasn't changed it would have to expend money and time preparing 3,000 staff to become authorised financial advisers (AFAs).

"In aggregate, the largest four banks estimate needing 11,000 AFAs to do the same," the ANZ document says, and that was not going to happen.
According to Power, the FSP "will greatly simplify compliance while still providing a high level of consumer protection".

And we all want that, even the ANZ, which says, despite the wind back of its regulatory responsibilities, it remains supportive of "Government efforts to increase public confidence in the financial advisory sector" - an ironic statement indeed in light of ANZ's recent troubles in that area.

David Chaplin