NZ News 10 June 1999

Proposals to licence all New Zealand advisers has fallen on silent ears at the country's leading associations, according to New Zealand First consultant, Roly Metge.

Proposals to licence all New Zealand advisers has fallen on silent ears at the country's leading associations, according to New Zealand First consultant, Roly Metge.

Official responses to the New Zealand First Party's proposal to reg-ister financial advisers were not received by the original deadline of May 19, Metge says.

New Zealand First had called on the Financial Planners and Investment Advisers Association (FPIA), the Investment Savings and Insurance As-sociation (ISI) and the Health Funds Association (HFA) to add to the debate on a proposed scheme for registration of all financial advis-ers.

Metge says while the FPIA has responded "in a technical sense" the deadline for official replies will be extended.

"It is disappointing if these bodies are not prepared to coordinate and respond to this serious issue of concern," Metge says. "All rep-resentative bodies should appropriately represent their members."

He says submissions have already been received from individual advis-ers and consumers.

However, head of the ISI, Vance Arkinstall, says the ISI has sent a reply to New Zealand First within the original deadline.

"The ISI view is that we are not aware of any compelling evidence that the new disclosure regime is not working," Arkinstall says.

"We have asked New Zealand First to share the information they have with us."

Metge says he is preparing a file on a number of cases concerning "financial cowboys" that highlight the need for registration.

Arkinstall says the ISI currently has no complaints under review and questions whether the cases Metge refers occurred before the intro-duction of new disclosure rules for financial advisers in 1996.

"There is always one or two who break the rules and registration wouldn't change that. Racing down the track to registration is not the ideal answer," Arkinstall says.

"We don't want to be stampeded into legislation before the coming election."

A joint response from the ISI and the FPIA is being prepared follow-ing a meeting last week.

Co-president of the FPIA, David Milner, says he personally favours some form of adviser registration.

"Advisers who seek industry support have to belong to a professional body. And as the FPIA are the only credible body that would mean be-longing to us," Milner says.

He says a public register of FPIA members may be useful where people can phone a number to confirm an adviser is a member.

However, Milner says the extent of adviser misconduct in New Zealand is minimal.

"There are about 2000 financial advisers in New Zealand and between them they would handle a minimum of about 24,000 deals a year. If New Zealand First only has one or two cases before it that's a very small proportion, Milner says.

"The FPIA has no complaints before it at the moment. There's been the odd one in the past but none have been that serious."

The International CFP Board of Standards is due to sign over the CFP license to the Financial Planners and Investment Advisers Association (FPIA) this week.

Vice-president of the FPIA, Phillip Matthews, says the CFP Board has confirmed all conditions for giving the CFP authority to the FPIA have been met and a representative will be in New Zealand this week to sign the document.

The signover was originally intended to occur on April 1 this year but the FPIA failed to meet all the CFP Board conditions by that time. The transfer was help up by a delay in formalising the Char-tered Life Underwriters (CLU) to the new organisation and the distri-bution of the FPIA code of ethics on disc to all members.

The delay has also caused concern for many potential members of the FPIA who have held back joining until the CFP authority was con-firmed.

"I can understand why people have held off joining but I hope that any members who have been putting off joining the new association will now join," Matthews says.

"Membership has been trucking along nicely and we're quite pleased with the numbers coming in."

The FPIA has been aiming for a membership of 1200-1500. Matthews says he is confident that target will be achieved before the FPIA conference in July this year.

The FPIA board is considering extending the deadline for this year's registration from June 22 in light of the CFP license transfer hold-up.

Colonial First State Property Trust has been under-subscribed by 32 per cent forcing the Colonial Group to pick up the unsold units as underwriters of the float.

Colonial hoped to raise $145 million to create the trust, which con-sists of 14 commercial and industrial properties in Auckland, Christ-church and Wellington.

Shayne Hodge, head of trans-Tasman property investment firm Waltus Investments says the yields of more than 10 per cent promised for the Colonial property trust should have been attractive to investors.

"The yield was right but, right or wrong, an unfortunate perception has gained ground that the trust was just a dumping ground for prop-erties Colonial couldn't sell," Hodge says.

"There is nothing fundamentally wrong with the properties and the trust will be a good prospect if it lists below a dollar."

Many analysts are picking the unit price will dip below the original price of one dollar after listing.

Hodge says the under-subscription of the Colonial float is a reflec-tion of the poor state of the listed property market in New Zealand.

"It is not an indictment on Colonial but an indictment on listed property trusts. Why buy in listed trusts if you can buy into exist-ing direct property funds," Hodge says.

He says while listed property trusts offer liquidity that is not what investors in property primarily look for.

"Investors want property but listed trusts are suffering because of the quality. Waltus has just floated off $70 million direct property that was oversubscribed at yields lower than the Colonial trust of-fered," Hodge says.

"Colonial did seven out of ten things right with their property trust but they didn't communicate their intentions to the industry well and were selling into an endemically poor performing listed property mar-ket."

However, Hodge says the commercial property market is still strong with Waltus about to offer A$47 million of Melbourne property to investors on both sides of the Tasman.