FMA provides more details on what will be scrutinised under its latest review
Mortgage advisers are being encouraged to take an active role in shaping the future of New Zealand’s financial advice framework, as the Financial Markets Authority (FMA) launches a wide-ranging review into the accessibility of financial advice.
The review, announced by FMA chief executive Samantha Barrass, will explore how more Kiwis can access quality financial advice – and mortgage advisers are a key group the regulator wants to hear from.
FMA head of financial advice Romil Ghelani (pictured) told NZ Adviser that an “overly cautious approach to compliance” may be putting up roadblocks to financial advice accessibility.
“We want to have open and constructive conversations about this,” Ghelani said.
“Advisers are the ones on the ground, working directly with clients every day – you see first-hand what’s helping people access advice and what’s getting in the way. That perspective is crucial to shaping our approach to this work.”
Time to reassess accessibility, two years into the regime
The review will examine four major themes: consumer preferences and demographics, industry business models, digital advice and innovation, and the ease with which advice can be provided under the current regulatory regime.
According to Ghelani, the timing of the review reflects a natural point of reflection, now that New Zealand is more than two years into the fully implemented regulatory regime.
“After working closely with industry through licensing and monitoring, our view is now's the right time to take a closer look at access to financial advice,” Ghelani said.
He said that no single barrier to access had stood out, which made the review all the more necessary. Ghelani said that the FMA is particularly interested in exploring whether the removal of “class advice” and “personalised advice” categories under the Financial Advisers Act has had any impact on how advisers approach their services.
“Our terms of reference paper covers a proposed topic called ‘ease of provision’ which is all about how the new regulatory regime is impacting advisers’ ability to provide advice in practice,” he said.
“We want to understand whether this removal has had any unintended effects, especially around adviser confidence in offering simpler forms of advice, where that might be appropriate.”
The review also aims to better understand how different industry models affect advice accessibility. This includes the Financial Advice Provider (FAP) business model – an area where mortgage advisers, many of whom run small or independent practices, will have a unique perspective.
“Our evolving regulatory approach requires us to also develop a deeper understanding of how firms we regulate are operating on the ground, which includes their business models – so we can get a clearer view of what’s helping – or potentially hindering access to advice,” he said.
“As part of this, we will be looking at FAP business models from the perspective of conduct, client care, and advice quality.”
The stance on AI
Mortgage advisers are eyeing the concept of robo-advice and AI tools with some caution, and Ghelani says the FMA is “technology-neutral, but pro-innovation” on this for now.
The review will touch on how emerging tools like AI and digital advice platforms are shaping accessibility. One of the first AI-driven mortgage advice tools landed in New Zealand just this week, though regulation has not yet reached this area.
Ghelani said the FMA wants to understand the role of emerging technology in the advice space, what’s working well, and what might warrant more attention.
“We’re open to innovation, and we want to see firms leveraging Digital Advice and AI to improve the way consumers engage with financial services,” he said.
“We have a separate initiative focused on this, our pilot Regulatory Sandbox; innovation is also a key theme in our Access to Advice Review. We want to understand how emerging technologies are being used, and where there might be opportunities to support broader access to quality advice.”
Mortgage advisers invited to take part
Ghelani called on mortgage advisers to provide feedback on the review through submissions and, if willing, to participate more actively.
“For mortgage advisers, if you are interested in participating in the review, such as receiving a questionnaire, being interviewed, or providing data you think is relevant, you can include this in your submission,” he said.
“I have always found industry feedback immensely valuable, and we read every word of it. We will be closely considering all feedback from the industry.”
Feedback on the terms of reference is open until 30 May.
