KEY POINTS:
Complaints to the Institute of Financial Advisers have jumped - and the collapse of finance companies is to blame.
Institute chief executive David Hutton says there are 22 complaints relating to the collapse of finance companies - well above normal. The institute can hear complaints only about its 1600 members.
If a member is found to have breached the institute's code of ethics and professional conduct, then a disciplinary committee - chaired by a retired judge - can impose fines, costs or order supervision.
There's no guarantee the names of any offending advisers will be published by the institute though. If, for instance, the disciplinary committee feels an adviser needs to keep better records or required supervision, then the impact of naming them could be out of proportion.
Hutton says he expects some of these complaints to have made their way through the process in the next few months.
The topic of finance company collapses was top of the agenda when Commerce Minister Lianne Dalziel gave a speech last week to the institute.
She said the "recent volatility" in the sector had again highlighted the importance of the role of advisers, "especially in terms of the reliance that unsophisticated investors place in people they trust".
Although new rules are coming in force to improve the quality of financial advice in the market, ultimately the responsibility for financial decisions and risks lay with the individual.
"I confess that I do not understand why people who have spent their lives working hard to save their money can invest in products without ... taking independent professional advice," said Dalziel.
That these investors were described as "unsophisticated or naive" didn't mean that anyone was less empathetic to their loss, but "they cannot expect the Government to step in and retrospectively put in place checks and balances that they didn't take advantage of at the time", said Dalziel.
"There are those who say these investors have been too trusting and I believe that is true.
"But why would you trust your life savings with someone with no professional qualifications or membership of a supervisory body?
"Why would you rely on a former All Black touting a product on TV? This has been a wake-up call but, then again, so was the 1987 crash. People's memories are so short-lived."
The Government could not eliminate risk, because if it did, there would be "no investment, no innovation and no growth to ignite our transformational ambitions for New Zealand".
