KEY POINTS:
Tower, one of New Zealand's biggest financial providers, has called for financial advisers to be held personally accountable for the advice they give through individual licences and compulsory indemnity insurance.
Tower Investments chief executive Sam Stubbs was one of more than 45 people to present submissions to Parliament's finance and expenditure select committee yesterday on two bills aimed at tightening financial adviser regulation.
The Financial Service Providers Bill seeks to ensure financial service providers are registered and join an approved disputes resolution scheme while the Financial Advisers Bill aims to create and monitor standards for advisers. But Stubbs, who until the end of last year was chief executive of finance company Hanover, said the Financial Service Providers Bill did not go far enough and if kept in its current format would only dress-up the status quo.
Stubbs said individual licences were standard practice in the US, United Kingdom and Australia.
"That is the international standard. It would be unusual for institutions to be accredited."
He said the licence would not need to apply to bank tellers or telemarketers but only to those who gave advice and would be similar to the registration required by other professionals such as doctors and lawyers.
"Why should financial advisers be different to any other profession?"
He believes that in order for trust to be restored to the financial services industry investors need to know the person they will be getting advice from will be held personally responsible for that advice and will not be able to hide behind an organisation.
"When you sit across the table and get advice you want to know they are personally responsible."
Stubbs said accrediting institutions would make it easy for the big brands but those at the margins, where there is more likely to be trouble, would be able to hide behind companies.
Stubbs' bucked the trend as other financial providers have welcomed licensing of institutions.
Investment Savings and Insurance Association chief executive Vance Arkinstall said in general the industry was behind the proposed changes.
"In order to generate public confidence and trust, ISI members support proposals for registration and regulation of investment advisers."
But he believed the industry should join forces with the Securities Commission to monitor and regulate advisers rather than leaving it solely up to the commission. Further submissions will be heard on July 23 and the committee must report back to Parliament by September 1.
