The government-appointed task force was established last year to see if there was a problem with the financial advisory industry and, if so, to recommend some changes.
The task force said, in an options paper released yesterday, that it doesn’t believe the advisory industry is in “crisis”, but it does believe that changes need to be made to improve its performance and consumer confidence.
“The task force does not support the ‘do nothing’ option. The task force believes that the issues identified are, in aggregate, sufficiently significant to require a response.”
It also says there is a “reasonable level of consensus” amongst the industry that change is required. It also made it clear that its coverage should be as wide a possible and include mortgage brokers as well as people selling property investments.
“At this stage the task force believes that particular occupational groups should not be excluded from the review.”
It argues that any form of regulation should cover the credit side of the financial services industry as well as the investment side.
“New Zealand’s household exposure to financial liabilities far exceeds household exposure to financial assets,” the options paper says. “Debt and debt management are therefore particularly important areas in New Zealand for financial advice. This is a contributing factor to the task force’s preference for the scope of its enquiry to cover advice across the investment, risk and credit categories.”
While the task force is going for a broad approach it is leaving the door open for groups such as mortgage brokers to argue their case for exclusion.
The New Zealand Mortgage Brokers Association has previously said it supported regulation, but felt that the task force was not the appropriate vehicle for looking at brokers. It has argued for self-regulation, supported by empowering legislation. This is one of the four options put forward in the options paper.
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