FMA reviews financial advice to enhance consumer access
The Financial Markets Authority has announced its intention to conduct a comprehensive review of the financial advice sector.
FMA chief executive Samantha Barrass (pictured) detailed this initiative at the Financial Advice New Zealand conference in Christchurch.
The review is set to address the critical aspects of accessibility to financial advice, aiming to enhance both consumer and industry outcomes.
Scope and intent of the FMA review
The review will explore several key areas to better understand the current landscape and pinpoint potential improvements. These areas include:
- Consumer preferences and demographics: Understanding the needs and backgrounds of those seeking financial advice.
- Industry business models: Examining how businesses operate within the financial advice sector.
- Digital advice and innovation: Assessing the role and impact of technology in delivering financial advice.
- Ease of provision of financial advice: Identifying regulatory or operational barriers to providing advice.
“We know there are many positive impacts on consumers who receive good quality financial advice,” Barrass said. “This is about understanding how we as a regulator continue to ensure we regulate in a way that ensures quality advice reaches even more New Zealanders.”
The review is expected to refine FMA’s regulatory focus, aiming to reduce unnecessary burdens and promote better access to financial advice.
Industry engagement and feedback
FMA, which recently introduced a new regulatory return framework for licensed financial institutions, encourages broad industry participation to ensure the review addresses the most pertinent issues.
FANZ CEO Nick Hakes has expressed support for the initiative, emphasising the importance of collaborative input on the draft terms of reference.
“We encourage everyone to have their say on how they think the review can best serve financial advice providers and New Zealanders,” Hakes said.
Deep dive into business models
Further to the review, Barrass announced that FMA would deepen its analysis of business models within the sector. This effort will aid in identifying emerging risks and ensure that firms are operating fairly and with integrity.
Feedback on the review’s terms of reference is invited until May 30, reflecting FMA’s commitment to inclusive regulatory development.
FMA reveals changes in financial advice sector
Alongside the review announcement, FMA released data from its latest regulatory returns, covering the period from July 1, 2023, to June 30, 2024.
Key findings include:
- A slight reduction in the number of financial advisers, from 9,300 in 2021 to 8,472.
- Digital advice is on the rise, with 36 FAPs offering it to 86,500 retail clients.
- The vast majority of complaints, 97%, were resolved within three months, showcasing effective dispute resolution within the sector.
This data underscores the evolving dynamics of the financial advice landscape, driven by technological advancements and changing consumer needs. FMA aims to use these insights to better shape its regulatory approach and engagement with the sector moving forward.
