The Financial Markets Authority (FMA) has released a report on its supervision activity over the past 18 months, and said that most adviser firms have been “open, engaged and cooperative” during its monitoring reviews.
However, it said that some firms were not disclosing important information, and were not taking the action required by the regulator. In one instance, it had to issue a notice under the FMA Act 2001 to access information which a firm had failed to provide.
“We expect licensed and authorised entities to provide all notices and reports that are required by their obligations to the FMA in a timely manner,” the FMA stated.
“We also expect entities to engage with us in an open and transparent manner, particularly in relation to changes in their business and any breaches or issues they have identified.”
Specifically, the FMA’s report revealed weaknesses in some AFAs’ and QFEs’ advice disclosure practices.
FMA chief executive Rob Everett said some of the issues identified in the report were “concerning,” and that the regulator would need to take stronger action where shortfalls were not properly addressed.
“We saw much good progress over the last year but were unimpressed by attitudes from one or two firms that suggested to us that they saw good conduct as something that only needs to be demonstrated when we visit,” Everett said.
“This is not a box-ticking exercise, it needs to be woven into the culture of providers.”
“Good conduct comes from the top,” he added.
“We expect boards and senior leadership to champion customers’ interests, and to demand the systems and processes required to deliver strong governance of these issues.”
Director of market engagement John Botica said that advisers have a crucial role to play in the resilience of New Zealanders throughout the COVID-19 crisis, and that the new financial advice regime will not allow for “cutting corners.”
“Many New Zealaders are under insured, under saved and have too much personal debt,” Botica commented.
“It is our job, together, to guide consumers to make better decisions about their financial futures.”
“We have challenges ahead, and in front of us is the new financial advice regime, which is only a few months away,” he said.
“When you unpack the new rules, they’re all about outcomes for clients. This means if you act honestly, fairly, professionally and in the best interests of your clients, you’re already there. It’s about giving practical, suitable advice, and not about cutting corners.”