FMA Unveils Review Into Financial Advice Accessibility To Drive Better Outcomes For The Financial Advice Sector

The Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko – Chief Executive Samantha Barrass today announced a review of the advice sector to help drive better outcomes for industry and consumers. At the Financial Advice New Zealand conference in Christchurch, Ms Barrass said the FMA would undertake a review of access to advice which is a cornerstone of the regulatory regime.

She also revealed new data and analysis from the regulatory returns questionnaire the FMA gathered from the financial advice sector at the end of 2024.

Access to advice review

The purpose of the access to advice review is to help the FMA understand both opportunities and challenges in relation to improving accessibility of financial advice to consumers. It will focus on four key themes, which are:

1. Consumer preferences and demographics
2. Industry business models
3. Digital advice and innovation
4. Ease of provision of financial advice

“We know there are many positive impacts on consumers who receive good quality financial advice. This is about understanding how we as a regulator continue to ensure we regulate in a way that ensures quality advice reach even more New Zealanders,” Ms Barrass said.

The review aims to get to the core of these issues to improve where the FMA focuses its regulatory efforts, to be more forward looking and risk based and make better decisions on interventions. The FMA anticipates this will help identify any unnecessary regulatory burden to improve the availability of financial advice.

“This review will help make outcomes focussed regulation real for you and us. We want you on this journey with us, so we encourage you all to provide feedback on scope of this review to make sure we are focused on the right topics” Ms Barrass said.

FANZ CEO Nick Hakes welcomed the review: “I would like to thank Ms Barrass and the FMA’s Financial Advice team for the opportunity to collaborate on the draft terms of reference of the review. We encourage everyone to have their say on how they think the review can best serve Financial Advice Providers and New Zealanders.”

Ms Barrass also announced the FMA is looking at deepening its understanding of business models in the financial advice sector, which will help us identify our future focus areas. The work will also inform the FMA’s review on access to advice.

“Analysing business models is critical to helping the FMA identify emerging risks around firms treating clients fairly, providing suitable advice, and operating with integrity. It will make our regulatory approach real, by shifting to having more sophisticated conversations with FAPs about how compliance fits within their business,” Ms Barrass said.

Feedback on the terms of reference is open until 30 May. Details on the draft terms of reference for the access to advice review and how to provide feedback can be found below.

Regulatory Returns snapshot

Ms Barrass also unveiled a snapshot of the health of the industry from the FMA’s regulatory returns data for 1 July 2023 – 30 June 2024.

“This is the first time the FMA has got a comprehensive snapshot of the financial advice sector since the new regime came into effect in March 2023. This data provides valuable insights into what types of products are being advised on as well as the way customers are receiving that advice. We will use the data to help shape the way we supervise the sector going forward,” Ms Barrass said.

Key statistics (as of 30 June 2024)

• 1410 licensed financial advice providers in NZ submitted regulatory returns
• 8472 financial advisers compared to 9300 in 2021
• Life and health insurance are the most common financial products advice is provided on
• 36 FAPs are providing digital advice and 86,500 retail clients received digital advice
• 97% of complaints received were settled within 3 months.

This data shows us that the sector remains strong following the regulatory changes. Many FAPs are providing advice on more than one product or have referral arrangements, indicating a holistic service to their clients.

More information on the FAP regulatory returns data, and the FMA’s analysis of the data, can be found here: https://www.fma.govt.nz/library/reports-and-papers/financial-advice-providers-industry-snapshot/ 

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