19 Nov 2009

Financial adviser commission 'should be banned'

7:01 am on 19 November 2009

Proposed standards for financial advisers don't go far enough, Consumer New Zealand says. It is calling for a ban on commissions.

The Code Committee for Financial Advisors has proposed that advisers be required to tell clients if they are receiving commission for selling a product.

It also suggests advice be given in writing, and the establishment of a registration and a complaints system.

Consumer New Zealand's chief executive Sue Chetwin says commissions lead to providing advice which is not in the client's best interest, and should be banned.

"The commissions can come from product providers and that means that the adviser is not independent, that they are only selling the products of a particular provider," she says

However the Institute of Financial Advisers says commissions are important, as many New Zealanders are reluctant to pay a fee for financial advice.

The Code Committee for Financial Advisors was set up by the Financial Advisers Act, and is charged with drafting a code of conduct for the industry.

Public submissions on its proposals can be made until 18 December.