New rules for finance advisers on the way

The Securities Commission is ploughing ahead with consultation to set up a minimum qualification for financial advisers despite no appointment to the role which will oversee it.

The commission yesterday released a paper on financial adviser competence in the first step towards producing a code for the industry designed to standardise the qualifications held by advisers and give greater confidence to consumers.

Moves to tighten rules for financial advisers were fast-tracked last year after the collapse of the finance company industry.

But a commissioner of financial advisers, the person charged with setting up the code committee and approving the rules once they have been consulted on, has still not been found despite a six-month search.

A spokesperson for the Ministry of Economic Development yesterday confirmed the appointment had still not been made.

The position was advertised in November and 27 people applied but none were given the job and the commission is understood to be looking for someone with more legal competence.

Securities Commission director of supervision Angus Dale-Jones said he was still confident of meeting the end of 2010 deadline for adviser competency.

"It is quite feasible to have the code in place by 2010. I'm pretty relaxed about that," he said.

Dale-Jones said consultation had begun with the industry and education providers. He said as long as the code committee was set up by midway through this year the code could be completed early next year with advisers meeting competency requirements by the end of the year.

But advisory groups have previously said it could take years to authorise the 10,000 financial advisers estimated to be in New Zealand.

Dale-Jones said the paper was designed to be the start of the process to get parties involved in building the code.

"This is a preparatory piece of work for the code committee."

The consultation aims to take stock of the different qualifications advisers have and asks what they see as being a good minimum.

The commission proposes the industry use the National Qualifications Framework for guidance and start with minimum qualifications like those introduced by industry training body ETITO last year. It set up a level four qualification in July and last month topped that with a second level five qualification.

Dale-Jones said the commission saw the level five qualification National Certificate in Financial Services (financial advice) as a type of "driving test" which all advisers could take to ensure they had the minimum ability to get on the road to giving advice.

"We need a generic measurable way of demonstrating competency so that people are speaking a language that means the same thing."

It wants the industry to help decide whether a baseline standard is needed and if the level five qualification, would be a good minimum.

Last year industry bodies said level five, which is equivalent to a diploma, was the minimum they would accept and would bring New Zealand in line with Australia.

Dale-Jones said the code and the Financial Advisers Act was critical to underpinning the reputation of New Zealand's financial markets.

"The financial services world touches every individual. We all grow up learning to read and write but for many, financial concepts are difficult."

Interested parties have until May 29 to get their submissions in.