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The Financial Markets Authority (FMA) has released a consultation document on its proposed review of access to financial advice in New Zealand.
Submissions close on 30 May.
Review focus
The FMA’s review will focus on:
- consumer demographics and preferences: the demographic factors influencing access to advice and potential barriers (including affordability, level of financial capability, financial wellbeing, literacy and education).
The FMA notes that access requires that advice is demystified, and that consumers are confident of its relevance to their lives. It also wants to know if there are any “advice gaps” and whether there are consumer preferences for alternative sources of financial advice. - innovation and digital advice: whether there are any barriers that are currently resulting in less than 3% of licensed financial advice providers offering digital advice.
The FMA is also interested in how emerging technologies such as artificial intelligence and the upcoming adoption of the Consumer Data Right (CDR) may influence greater innovation in financial advice and provide opportunities for FAPs - remuneration structures and advice business models: whether different remuneration structures and business models impact consumers’ access to financial advice, including whether there are any structural barriers to entry to the market that limit consumers’ access to financial advice.
The FMA will explore this through a separate review of financial advice business models and remuneration structures, from the perspective of conduct, client care, and advice quality - ease of provision of regulated financial advice: whether the broad principles-based advice regime introduced via the Financial Service Legislation Amendment Act reforms (including the removal of the distinction between ‘class advice’ and ‘personalised advice’) has led to unintended consequences.
The FMA notes it has seen instances where advisers are unsure how to meet their obligations when offering a range of advice and/or products. The FMA wishes to understand how the new regime might be influencing FAPs’ choices when providing financial advice and whether that might impact FAPs’ willingness to innovate.
The FMA will also look at:
- direct and indirect compliance costs
- how part two of the Code of Professional Conduct for Financial Advice Services (relating to adviser competence, knowledge and skill) influences the availability of advice
- whether conservative compliance practices are a barrier to providing advice, and
- whether FAPs require additional guidance to improve confidence in the range of services they can provide, including simplified advice.
For assistance with making a submission or any questions, please contact one of our experts.
