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"We are not advocating to ban commissions altogether": Everett, FMA

Financial Advice New Zealand included this transcript from the recent select committee interview in their newsletter, and it is worth repeating here:

 

"We are not advocating to ban commissions altogether": Everett, FMA

See below Rob Everett's response to Paul Goldsmith's question at the recent select committee: “Are you of a mind—a number of suggestions out there that all conflicted advice should be banned full stop, you wouldn’t be advocating for that or would you?”

Rob Everett"So our recommendation in the report made a distinction between sales incentives that are offered by employees of whoever provides the products, where we were pretty tough I think on saying that we thought volume-based sales incentives should be removed.

As you know, advice is more complex, because people, where people are buying products through an advice channel as opposed to directly from the provider, which generally speaking should be a good thing, people don’t like to pay upfront for advice.

So it puts you in a position of having to look at the structure of remuneration for the advisers that would be different than in an employed environment.

And that is complex, it was a big part of the debate on the financial advice bill, and our view as stated in the report is that, we want product providers to work very hard at structuring commissions and other incentives for advisers so that they respond to the needs of the customer - we’re not advocating they be banned altogether.”

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