Adviser rules now in force to keep out 'sharks'

Keep out the sharks. Photo / Thinkstock

A group of 10 financial advisers are the first to become qualified under new regulations which came into force yesterday.

As of December 1, those who have sat the new qualifications and passed the required papers can now call themselves authorised financial advisers (AFAs).

From July next year only AFAs will be able to give personalised investment advice on complex investment products like KiwiSaver.

They must also adhere to a new code of professional conduct and belong to an official disputes resolution body, of which there are four.

Securities Commission director of supervision Angus Dale-Jones said the commission would be helping to educate advisers and getting them up to speed over the next six months.

"But I expect from July 1, there will be a crackdown," he said.

Commissioner of Financial Advisers David Mayhew said as of early next year the commission would signal to the public that if they wanted personalised investment advice they should deal with an AFA.

"If you're a retail client dealing with an AFA you'll know they're qualified to provide investment advice, they'll be disclosing how they're paid and they are required to put your interests first and to provide plain English investment advice for your personal situation."

So far, 4196 people have registered for training and around 5000 people are expected to become qualified.

Members of the public can go on to an official website to see who the AFAs are and who their disputes resolution body is.

Serious misconduct complaints can also be laid directly with the Securities Commission and will be handled by its complaints committee.

Colin Vazey, a chartered accountant from Hamilton who is one of the first 10 to become an AFA, said he decided to sit the qualification early to "get it out of the way".

Vazey said he was surprised there were only 10 who had qualified so far.

"They have got until the end of June and I think they are just procrastinating." The cost of training was also off-putting, he said.

Vazey said he hoped the new qualification would verify his credentials to his clients as well as cutting some of the sharks out of the industry.

Verlenne Robertson - a stock broker from Whangarei - hoped it would instil more confidence in the industry, although she believed it would take time.

"I think it is something we have needed for a number of years."

GETTING AUTHORISED
* Finance professionals wanting to become authorised have until July 1 to do so.
* Only authorised financial advisers will be able to give personalised investment advice on complex products like KiwiSaver.
* They must also adhere to a code of professional conduct.
* They cannot call themselves independent if they receive commissions or other incentives to sell financial products
* They must belong to an approved disputes resolution scheme.

ON THE WEB

To see a list of those who have qualified as AFAs visit: www.fspr.govt.nz