Measures to be implemented in late 2010 will see all financial advisers supervised by the Securities Commission.

Our recent mystery shop of financial advisers revealed what we regarded as dismaying standards of advice from many of the advisers we received plans from.

The Securities Commission was one of the members of the government inter-agency group that helped us plan the mystery shop. It didn’t fund the project. Annabel Cotton, the Commissioner for Financial Advisers at the commission, has provided the following summary of measures that she believes will improve the professionalism and integrity of advisers and make them more accountable.

The measures will be implemented in late 2010 and will see all financial advisers supervised by the commission.

• All financial advisers will need to be individually registered. Investors will be able to check the Companies Office website to see if a person is registered, their contact details and the areas they can give advice on.
• Financial advisers giving investment advice must be authorised by the Securities Commission. Advisers must also be authorised if they provide a financial planning service – that is, they assess a client’s financial situation and set goals and options for achieving those goals.
• Authorised financial advisers will have to comply with a code of professional conduct so consumers can expect minimum standards of competence, ethical behaviour and client care. They will be monitored by the Securities Commission to ensure they meet these standards and are skilled to work in the area in which they are offering services. The commission will be able to stop an adviser from operating if they breach the code.
• Advisers must belong to an independent dispute resolution scheme so that investors can make complaints.

Financial advisers are already required to provide clients with a written disclosure statement outlining their credentials, fees and any relevant interests before giving any advice.

The commission suggests you should also ask an adviser these key questions: What are their qualifications? Are they a member of a professional association? Will they receive any commissions or other remuneration as a result of you taking their advice? What are the total costs you will pay?”

More information

• Financial advisers - our full report including mystery shopping results, background research and FAQs.
• Consumer blog - CEO Sue Chetwin's views on reaction to the financial advisers report 

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