Author Priscilla Dickinson. Article originally published in NZ Adviser.

Government’s 100-day plan provides reprieve for advisers.

Financial Advice NZ says members appreciate the breathing space.

In what is regarded as a welcome reprieve for the industry, Financial Advice New Zealand is pleased to see that the new government’s 100 Day Action Plan does not include regulatory changes affecting financial advisers.

Meanwhile, the removal of ‘maximum sustainable employment’ from the Reserve Bank of New Zealand’s mandate won’t necessarily provide a faster return to the inflation target, or speed up the delivery of interest rate cuts, a senior economist says.

The government recently confirmed what it plans deliver in its first 100 days in office, unveiling its 100 Day Action Plan on November 29. 

A rewrite of the Credit Contracts and Consumer Finance Act (CCCFA) and restoration of the ability for property investors to deduct their mortgage interest cost against their rental income for tax purposes are among the policies listed in the National/ACT Coalition Agreement.

The 49 action points released under the government’s 100 day plan include legislation to remove the Reserve Bank’s dual mandate, but exclude a review of the CCCFA.

Financial Advice New Zealand interim CEO Tony Dench (pictured above left) acknowledged that the advice sector had worked hard to lift the profession while supporting clients (individuals and businesses) over a period of significant financial uncertainty.

Adviser members appreciate the breathing space, he said.

“We’re glad that the government is not rushing into a review of CCCFA and we’re hopeful that they’ll do that in a considered and deliberate way in consultation with the sector,” Dench said.

Right CCCFA settings deemed important

The National government has confirmed its intention to rewrite the CCCFA to protect vulnerable consumers “without unnecessarily limiting access to credit”.  

Dench said that getting the settings right for lenders, advisers and consumers would be important.

When asked what Financial Advice NZ would like to see from a CCCFA review, Dench noted there had been evidence that the CCCFA requirements – which have been tweaked several times since introduced under the Labour government in December 2021 – had prevented some deals from going ahead.

“Whilst its incredibly important to protect consumers, whether in the personal lending space or the mortgage lending space, we’d like to see the CCCFA enabling those deals that are appropriate to continue to go ahead,” he said.

Single RBNZ mandate unlikely to return inflation to target faster: economist

Westpac senior economist Satish Ranchhod (pictured above right) told NZ Adviser that due to how the employment target was designed, he didn’t think that removing the ‘maximum sustainable employment’ mandate would necessarily provide a faster return to the RBNZ’s inflation target or deliver interest rate cuts sooner.

A tight labour market, as seen over the last couple of years would generate strong inflation pressures, and therefore the action that would encourage the Reserve Bank to take in terms of interest rates is exactly the same as if it were just considering inflation, he said.

“Even if they [the RBNZ] revert back to a single target, it wouldn’t cause a significant change in how the Reserve Bank would implement policy,” Ranchhod said.

It would make sense for the RBNZ to continue to focus on the target range midpoint of 2%, he said, noting that the inflation target were pushed higher, this could damaging for households and businesses.


Fair trading element of CoFi important

The National government previously indicated that it would repeal the Conduct of Financial Institutions Amendment Act (CoFi) regime, with former Financial Advice NZ CEO Katrina Shanks telling the NZ Adviser podcast that she thought it would take time to get focus on CoFi, but expected a microscope put on it going forward.

CoFi introduces a regulatory framework to ensure that registered banks, licensed insurers and licensed non-bank deposit takers comply with the fair conduct principle, with a focus on protecting consumers and promoting good outcomes.

As with the CCCFA, Dench said that a “considered and deliberate approach to consultation” on CoFi would be important. The Fair Conduct Programme requirement in particular remains valid, he said.

“The fair trading elements of the proposal of the existing CoFi legislation are very important and I think it will be important to preserve the intent of those, irrespective of where the legislation ends up.”

“Protecting the consumer is incredibly important in enhancing the trust of the sector and making sure that things can continue to move forward as they should.”

Dench noted that financial advisers had completed Level 5 qualifications and that over a third of Financial Advice New Zealand members had gone on to achieve a Trusted Adviser accreditation.

“This provides consumers with certainty that the adviser is committed to ongoing professional development, including having completed a professional ethics workshop and has a minimum of three years adviser experience,” he said.

Dench said that Financial Advice NZ wanted to ensure that all New Zealanders have access to quality advice and access to credit that considers their unique circumstances.

The peak industry body would continue to champion issues important to advisers working in lending, insurance, investment and financial planning, and work completed on conduct and culture, he said.

What do you think of the National government’s 100-Day Action Plan? Share your thoughts in the comments section below.

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