Watchdog to focus on advisers' pay

New Zealand's investment watchdog is to take a closer look at the way financial advisers are paid after an Australian report recommended its Government work with the industry to put an end to its commission-based system.

Securities Commission director of supervision Angus Dale-Jones said it was closely considering recommendations made in the Ripoll report and would consider including some of its recommendations in New Zealand's adviser legislation, which is in the process of being revamped.

"It has come at a very good time for us. But whether we will be picking up on particular recommendations it is too early to say."

The Australian report is the result of a nine-month Government inquiry into financial products and services following the collapse of Storm Financial and Opes Prime, which lost investors thousands of dollars.

Bernie Ripoll, the Australian MP who chaired the inquiry, said beyond the events of the Storm collapse there was a need for improvement in the quality of financial advice given in Australia.

The report recommended the Government undertake consultation on ways to wean the industry off payments from product providers like commissions and bonuses.

"The remuneration incentives offered by financial product providers to financial advisers can lead to consumers getting advice that is not necessarily in their best interests."

Dale-Jones said changes in New Zealand were designed to help lift the public's confidence in the industry.

"At the heart of that is the ability to give advice objectively."

New rules governing Kiwi financial advisers are likely see all advisers qualified to a minimum standard and registered with the Companies Office.

A disputes resolution board will also be set up to hear complaints meaning investors will no longer have to go through a costly court process.