New Zealand’s regulator is following the footsteps of its Tasman neighbours and conducting a review on improving the accessibility of financial advice.
The Financial Markets Authority (FMA), which is responsible for New Zealand’s financial regulation, announced this week that it will conduct an advice review on the opportunities and challenges in financial advice.
There are 8,472 financial advisers in New Zealand as of 30 September 2024, compared to around 15,500 in Australia. This figure is down 9 per cent from 9,300 in 2021, and the majority have been providing advice for over five years.
Looking at financial advice providers, there are 1,410 providers in New Zealand, with 406 working as a sole adviser or one providing digital advice. A further 942 are providers who may engage several advisers providing advice to retail clients and/or have authorised bodies under their licence and/or digital means, with the remainder providing financial advice to retail clients via nominated representatives.
The FMA said: “The purpose of the access to advice review is to help the FMA understand both opportunities and challenges in relation to improving accessibility of financial advice to consumers.
“The review aims to get to the core of these issues to improve where the FMA focuses its regulatory efforts, to be more forward-looking and risk-based and make better decisions on interventions.”
The four proposed areas for consideration in the terms of reference are:
- Consumer preferences and demographics.
- Remuneration structure and advice business models.
- Digital advice and innovation.
- Ease of provision of financial advice.
The review follows changes in 2021 when the Financial Markets Conduct Act 2013 was amended to introduce a new regulatory framework for giving financial advice.
FMA chief executive, Samantha Barrass, flagged the organisation is particularly keen to understand the different advice business models, which will form part of a separate review, and the structural factors that may be affecting smaller players and new entrants.
Speaking at the Financial Advice New Zealand annual conference, she said: “Our ongoing monitoring and supervision of the sector has identified that some key drivers of certain behaviours and poor conduct are closely linked to these business and remuneration models.
“By looking under the bonnet of these structures, we will be able to better understand where to focus our regulatory efforts, and have more deep and meaningful compliance conversations with advisers. It will also inform our review of access to advice.”
Feedback on the terms of reference is open until 30 May.
