On the eve of the closing date for submissions on the MBIE review of the FAA/FSP I have tried to work out what is likely to happen. Estimating the probabilities of likely outcomes is fraught with difficulty and perhaps not entirely respectful of the process. So setting that aside I have tried to work out what are the most 'popular' proposed changes.
Although there are lots of stakeholders in the MBIE review and therefore lots of things we do not agree on, there are some on which there is, at least, more general agreement, if not actual unanimity.
What do I mean by agreement? Among the advisers, insurers, consultants, and regulators I know the following are broadly agreed:
- For something to be ‘advice’ it must be ‘personalised’ - most people are happy to see 'class' advice stay, but would like you to stop calling it advice.
- For 'class' information and execution-only sales make it clear that these are not financial advice.
- De-categorisation: insurance is as complicated as investment, and so if you are giving full personalised advice on it you should be following the AFA Code and meet those standards.
- Whatever kind of adviser you are you should be subject to the same standards if you are selling the same product type with the same kind of advice. QFE advisers, RFAs, AFAs - if it's the same product, then it should be the same standards.
- The FMA should provide guidance on limited personalised advice - what is needed is a safe harbour to allow more limited advice to flourish again.