Financial Advisors Act 2008: The Failure to Ban Commission-Based Remuneration

Abstract

It would be impossible to describe how it feels to see your hard-earned savings and the security for your retirement disappear. Since 2006 this feeling has become a reality for many New Zealanders. The decision to invest into one of the 64 failed finance companies has caused the loss of over three billion dollars of New Zealander’s life savings.1 Many of these investors followed the recommendation of a financial adviser. They put their trust and confidence in financial advisers, only to see their investments fail. As the investment decision was being made the financial advisers received commission from the finance companies they recommended. It should be no surprise that confidence in the financial advice industry has now diminished, a result that has only been exacerbated by the global financial crisis.