Perimeter enforcement underway
Thursday, July 21st 2011, 8:37AM
Since 1 July I've noticed several advisers asking when are we going to take action against advisers who are breaking the new rules. That's an entirely fair question and a function expected of FMA.
Now that the majority of initial licensing is complete I have put a team together to focus on the perimeter. I'll explain what that means.
Inside the 'stadium' are the regulated- those who have gone through the effort and investment of getting themselves properly registered or licensed, whether individuals or firms - RFAs, AFAs, QFEs etc. They have tickets to the game.
Home watching the game on TV are those who have decided that being a financial adviser is not for them. So they have stopped (or not started) doing work that would otherwise require them to be registered or licensed. The right thing to do.
Then there are the perimeter players - some unaware of their obligations, others operating illegally, often knowingly. These include people without tickets who hover around the stadium looking for an opportunity to jump the turnstiles, unseen. These people:
- May be providing financial advice without being registered.
- May be RFAs still doing personalised investment advice, eg KiwiSaver, without being authorised.
Some financial advisers may not realise they are practising illegally, having ticked only 'Broking services' on the Financial Service Providers Register, thinking it meant mortgage, insurance or share broking. If they are providing financial advice then what they should have ticked is 'Providing a financial adviser service (such as financial advisers, insurance advisers and mortgage brokers)' .
'Broker' in this legislation has a particular definition to do with handling client money. Now would be a good time to double check your profile on the register and correct your registration details if necessary.
As we do this perimeter enforcement work we will publicise details of action taken so those with tickets to the game don't feel cheated and those thinking of operating illegally will think twice.
My team will be even more effective if professionals help by showing us where to look if they spot illegal activity. We have a pile of complaints and tip-offs being assessed already and appreciate being given reliable information in good faith. In this way professional advisers can take the lead in improving confidence in your industry and outcomes for investors.
Comments from our readers
Commenting is closed