by Tony Vidler.
The latest financial services regulation development in New Zealand has an interesting twist.
One has an immediate sense that somehow financial advisers have just swapped places with the prostitution business.
By that I do not suggest that now financial advisers are trading in sexual favours of course, or that sex-workers are offering financial advice. But which of them engages in acceptable business practices does appear to be shifting it seems.
You see, soliciting for sex on the street is a legal and regulated business activity in New Zealand. Clearly it is an acceptable business practice to regulatory decision makers, and no problems are caused to society at large from allowing those in the business to hawk their wares to unsuspecting passers-by. I am confident there will be rules prohibiting them from soliciting near schools or something (which would be quite ridiculous as I am confident their target market are not to be found in schools), but by and large they are allowed to ply their trade openly in the street. Fair enough I suppose, and good for them.
However, we have a new piece of proposed law (the Financial Markets Conduct Bill) which says soliciting for financial products is something which should be stopped.
It’s an interesting contrast don’t you think?
Without meaning to be disparaging in any way to sex-workers (who by all accounts are prospering in the regulated world), it would be fair to observe that their trade would set off alarm bells on more moral radar screens than, say, a chap wandering around offering life insurance. I have no doubt the wandering insurance sales person (if they still actually exist) will upset someone whilst going about their business. But then, there is a proportion of society who clearly subscribe to Big Brotherdom in most aspects and are able to move to immediate moral outrage and indignant huffing and puffing at the suggestion that some people don’t care about carbon footprints either.
So we have a proposal which basically appears to want to banish “unsolicited offers” made by financial advisers.
But what is an unsolicited offer? Conceivably it is any offer to provide financial products or solutions which a consumer did not actively seek out.There’s a problem in itself. In 22 years I could count on my hands the number of consumers who have apparently woken up one day and decided that was the ideal time to contact me and put in place a financial solution – unsolicited.
In financial services, where the benefits or the products are primarily intangible in the first instance, most consumers are not alert to the benefits of taking particular courses of action. To help consumers understand what their possible courses of action may be the financial services industry engages in a significant amount of advertising, marketing and – for lack of a better word – soliciting.
Advisers talk to people, and in a sense “hawk their wares”. Just like most other businesses. Plumbers do it, and painters do it, and prostitutes too.
Why would it be that it is not acceptable for financial advisers to talk to people and offer their expertise, or products, or particular solutions?
In this country we have a recognised issue with low financial literacy across society; we have a recognised problem in under-insurance (and therefore over-reliance upon the state to put matters right); we have a looming issue with retirement funding for an aging demographic.
The proposed solution?
Don’t let those who might be able to help address these issues actually go out proactively and talk to consumers.
It is, in a word, farcical.
Professional advisers are universally in favour of laws and regulation to protect consumers from the unscrupulous. We have those laws already in fact.
Suggesting that the country requires a further piece of law-mongering that will undermine the public participation in the use of financial services and financial products, and relegate an entire industry to a position where it has less ability to market itself than prostitutes have, is simply irresponsible.
Doing so suggests that financial advisers provide less benefit to society as a whole than the streetwalkers, which I am willing to contest.
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