5 November 2009
Reforms underway to address financial advisers’ performance
Reforms underway will help address poor performance by financial advisers highlighted in the Consumer research released
today, says the Commissioner for Financial Advisers, Annabel Cotton.
Consumer found most of the financial advisers surveyed gave poor advice and their advice lacked proper analysis of
client needs and transparency in disclosing costs and interests.
“The findings are very disappointing but not surprising as the industry has been largely unregulated until now,” says Ms
Cotton. “Investors must be able to trust the advice they get and that’s clearly not the case.”
“The Commission is working with other agencies and the industry to put in place a framework to make financial advisers
more accountable. We expect to have this in place by the end of next year.”
The key changes include:
• Registration of financial advisers with the Companies Office with the register available to the public
• Financial advisers providing advice on investments such as shares, managed funds or futures, will have to be
authorised by the Securities Commission
• Authorised financial advisers will be bound by a code of conduct setting minimum standards of competence,
ethical behaviour and client care
• The Securities Commission will regulate the financial advice industry and monitor compliance with the Code of
Conduct on an ongoing basis
• The Securities Commission will be able to take action to suspend or ban authorised financial advisers if they
breach the Code of Conduct
• All financial advisers will have to belong to an approved dispute resolution scheme and there will be an
established process for handling complaints.
“The aim is to build the professionalism and integrity of the industry so that investors can have confidence in the
advice they get,” says Ms Cotton.
In the mean time she encourages investors to shop around. “Advisers must be able to understand investments they
recommend and clearly answer any questions investors may have. Investors should make sure they are completely
comfortable with any recommendations before committing to an investment.”
“Investors should also be aware that under existing law, financial advisers are required to provide clients with a
written disclosure statement outlining their credentials, fees and any relevant interests before giving any advice.”
Further information is available at www.seccom.govt.nz.