Recognition of qualifications that allow financial advisers to operate in both Australia and New Zealand should not be allowed to dilute standards in the Australian market, Financial Planning Association CEO Mark Rantall says.

“We welcome the harmonisation of legislation, especially with a close neighbour like New Zealand, but it’s important it does not lead to a reduction of standards,” he told insuranceNEWS.com.au.

Minimum Australian standards for financial planners are inadequate, but improving them could present problems with New Zealand harmonisation, Mr Rantall says.

“It’s widely recognised that RG146 (the minimum qualification standard for advisers) is way too low. The Australian Securities and Investments Commission (ASIC) has consultation paper CP153 out, which looks to have an initial exam for accreditation and ongoing exams every two or three years.”

ASIC also proposes that all new financial advisers be supervised by someone with five years’ experience in the industry.

But Mr Rantall says there is doubt about whether and how such proposed standards would be implemented across the Tasman.

“The question is, where does New Zealand fit into that?”

A research paper from lawyers Minter Ellison on the harmonisation arrangements observes that while the arrangements allow mutual recognition of advisers’ qualifications in each country, “New Zealand educational standards do not correspond with Australia’s in margin lending and superannuation so NZ advisers are not yet allowed to advise in these areas”.

Minter Ellison partner Richard Batten told insuranceNEWS.com.au the current situation is not really about legislative harmonisation but “appears to be recognition of respective training requirements and nothing beyond it”.

He says in the longer term “it would be prudent for Australian regulators to ensure New Zealand advisers have knowledge of issues arising in Australian legislation”.

Insurance brokers are not covered by the harmonisation legislation.