The sooner regulatory change comes the better, Booster founder Allan Yeo told the group’s annual conference last week.
In a speech at the Wellington event, Yeo said the Financial Services Legislation Amendment Bill (FSLAB) must get “enacted ASAP”.
“FSLAB is not a perfect piece of legislation, but no legislation ever is. Uncertainty and inaction is worse than an imperfect piece of legislation,” he said.
“In the absence of certainty, good advisers are unable to invest in the future of their business with any confidence, whilst advisers who have no place in the future of the industry continue to hang on and potentially continue to damage the reputation of the industry as a whole.”
The good news, according to Sharon Corbett, Ministry of Business, Innovation and Employment (MBIE) principal policy adviser, is that FSLAB should be passed later this year or early in 2019.
Corbett, in a panel session at the Booster conference, said Commerce Minister Kris Faafoi had assured her that “nothing was likely to hold up FSLAB” during the final legs of the parliamentary process. FSLAB, 24th on the parliamentary to-do list, passed its second reading in September.
However, she said the regulatory detail – including disclosure requirements, fees and levies – would probably be six months away. The accompanying adviser code of conduct should be finalised by the end of March next year.
MBIE was focused on delivering regulations that would allow a broad range of advisory businesses to exist, Corbett said. She said advisers should ignore “scaremongering” that FSLAB would make it impossible to operate outside of large groups.
“We’re wording hard to make the regulations proportional and reasonable,” Corbett said.
On the same panel, Michael Hewes, Financial Markets Authority (FMA) manager supervision, told the Booster crowd that the regulator still wasn’t sure how many Financial Advice Provider (FAP) licence applications to expect under FSLAB.
But Hewes said “high-level” estimates have put the projected FAP count at between 3,000-4,000.
In his speech, Yeo said there was a danger institutionally-owed advice businesses would be treated more favourably than non-aligned firms under regulations.
“Nonetheless, the rest of us are all minnows in our industry and have to play the cards that are dealt; we must read the winds of change, adjust our sails and position ourselves ahead of the competition,” he said.
“We can do this because the advantage of being a minnow is the ability to be nimble and agile.”
The Wellington-based Booster has almost $3 billion under management, including about $1.5 billion in KiwiSaver, sourced from its network of advisers.