Too much red tape turning off investors
Financial advisers are tied up in red tape affecting clients, and the same rules will soon cover lawyers and real estate agents.
They are designed to make financial advisers more accountable and prevent an estimated $1.3 billion of money laundering each year.
But Shareholders’ Association president John Hawkins, said the rules ‘‘had gone a little too far’’ and were a barrier to small investors.
The time and cost meant sharebroking and investment firms were less inclined to deal with smaller investors, which are usually classed as someone with $50,000 or less, Hawkins said.
I can see clients' eyes glaze over. Selwyn Paynter, Accordia.
Investors could use cheaper online broking services, but they would miss out on advice, Hawkins said.
The requirements were the result of the Anti-Money Laundering and Countering Financing of Terrorism Act.
The first phase of the Act has already come into force for banks, casinos and financial service providers.
As a result, investors must provide a sharebroker or financial adviser with a current rates bill, or power or telephone account, and passport verified by a Justice of the Peace.
Alternatively, a driver’s licence plus credit or gold card, as well as a utilities bill to prove a residential address.
Investors must also furnish bank account details and identification, signed off by a Justice of the Peace, lawyer, member of the police, an accountant, or religious minister.
Selwyn Paynter, a partner of financial advisory firm Accordia, said:
‘‘I can see clients’ eyes glaze over. I understand why we need this but could it be simpler,’’ Paynter said.
Bruce Cortesi, chairman of the Professional Advisers Association said: ‘‘Implementing the requirements is extremely lengthly and onerous even before you get to the loan documents.’’