WHO ELSE WANTS TO DISTRIBUTE KIWISAVER?
This flies in the face of current regulations which restrict the ability to advise on investment products - including Kiwisaver - to Authorised Financial Advisers only.
A few years back, while still operating as a UK Financial Adviser, the Laird was asked how distribution efficiency could be enhanced. The response was fairly terse, but went something like - "Control product access".
This was prior to the introduction of the British regulations, and was prompted by the propensity of certain life offices in the UK to appoint almost anyone who could breathe as a representative of their organisation and its products.
Allegedly, a Butcher Shop in Edinburgh was inviting customers to invest in Unit Trusts (Managed Funds) - while purchasing the weekly rations of haggis, sausages, and steak!
The Related Article at the end of this is worth reading - not quite the Edinburgh Butcher - but not too far away from it either!
It's worth repeating that the NZ legislation does not make reference to Authorised Financial Advisers (AFAs) - only to the requirement for all Financial Advisers to be registered, and to behave in a manner consistent with the terms of the Act.
Subsequent regulations demarcating the product classes - investment products are Category 1, risk and life insurance products with no cash value in excess of premiums paid are Category 2 - defined the functions of AFAs more closely.
This allowed life insurance advisers to avoid the onerous task of sitting exams and becoming qualified, because regulators decided that recommending a government stock investment was more complex than setting up shareholder protection or other business insurance mechanisms.
Breathtaking in its absurdity I know, but there were one or two voices at the time raising the issue of product structure versus product application.
Cutting through the various arguments for and against the suggestion, the Laird is of the firm conviction that there is very little chance of government agreeing to the proposal.
Kiwisaver is an ultra-sensitive area, and as we saw from the very early days of the FMA, there is zero tolerance at regulatory level for anything that might endanger the position occupied by the Kiwsaver product.
However, various references in the media to the methods deployed by Banks to 'persuade' customers to buy their in-house Kiwisaver products should have the FMA red-faced at their apparent lack of action to address these disgraceful practices.
It's here that the adviser representative bodies should be applying their lobbying efforts.
There's also a case for the Financial Services Council requiring members to conduct themselves in accordance with the spirit of the regulatory environment.
Questions to consider....
1. Have the Banks over-stepped the mark?
2. Should they be brought to task?
If you believe they should, drop me a note with examples of any such nefarious practices - who knows, somebody might listen if there is a chorus of protest?
Until next time
- Inside Money: KiwiSaver sale: Now not on (nzherald.co.nz)