OPINION: An unauthorised point of view

Tuesday 21st October 2008

On Radio New Zealand last week Michael Cullen revealed he was not authorised to give financial advice. A funny admission for a Minister of Finance to make but, under the recently-introduced Financial Advisers Act, Cullen probably wouldn't make the grade.

The new legislation, which finally arrived on the statute books late in September after a series of unusual events, has been designed to provide some regulatory logic to a previously lawless industry.

Essentially, the Act divides the industry in two with different standards of behaviour depending on whether an adviser deals in products, or services, deemed as 'complex' or 'simple'.

Of course, being legislation, it's not quite that simple but it's also less complex that it could've been. The Advisers Act, however, merely provides the framework for how the law will operate. As we speak the Ministry of Economic Development is filling in the blanks with regulations that will determine how the Act works at a day-to-day level.

The full force of the Advisers legislation is not expected to take effect until 2010. So Cullen was being a little bit disingenuous when he told Radio NZ he wasn't authorised to give personal financial advice - no-one is yet.

The Minister was using the excuse to conveniently dodge the reporter's question about how the bank deposit guarantee scheme might affect investors, say, in a balanced fund.

Smart move really.

Good question, too. As the world contemplates the worst financial crisis of a generation or two individuals are naturally quite interested in how that might flow into the specifics of their lives.

Forgetting about the global market meltdown for a minute, however, the introduction of KiwiSaver and new investment tax rules over the last year have handed New Zealanders plenty of other personal financial questions to consider.

Don't expect any answers from our public leaders. And don't ask me either. I am not authorised to give financial advice.

Business writer David Chaplin blogs on personal finance. David is the editor of ASSET Magazine and also writes for Good Returns.

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