FMA monitoring not just for AFAs

All financial advisers should prepare themselves for a possible visit from the Financial Markets Authority in the near future, the Professional Advisers Association says.

Friday, August 24th 2012, 7:00AM 3 Comments

by Niko Kloeten

In its new publication Preparing for Financial Markets Authority Adviser Monitoring, the PAA says it's not just authorised financial advisers (AFAs) who should be getting ready for a knock on the door from the regulator.

"The FMA's current focus is to monitor authorised financial adviser (AFA) businesses. It would however be sensible for all categories of financial advisers to plan for a possible FMA review or visit over the next few years," it says.

As well as preparing for a visit from the FMA, registered financial advisers should also familiarise themselves with the Code of Professional Conduct for AFAs even though they are not bound by it, the PAA says.

"The FMA want you, as a professional adviser, to show them that you understand how to meet your obligations under current regulations, including section 33 of the financial advisers act (skill, care and diligence).

"AFAs must understand and meet their obligations under the Code of Professional Conduct. RFAs should also understand the obligations in the Code and consider applying the code standards to their business."

The FMA uses a number of criteria for selection of businesses to review including targeted reviews based on information received, the publication says.

"If an adviser conducted practices which were not recommended, it might not be the FMA who notices: some members of the industry may be inclined to let the FMA know what their opposition may or may not be doing.

"The FMA has fielded and followed-up on complaints from both the industry and public."

PAA chief executive Edward Richards said the publication had been produced for members of the PAAas part of the organisation's Friendly Guide series but "we see it as a relevant and helpful publication for the financial services sector."

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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Comments from our readers

On 24 August 2012 at 8:03 am BTW said:

Don't forget that RFAs (and AFAs for that matter) also have fiduciary obligations under common law, which are much higher than that imposed by the Act and the Code. e.g act in best interests, avoid conflicts etc. The recent statutory reform hasn't changed those obligations (despite an apparent lack of awareness of them).

On 24 August 2012 at 4:45 pm Andy said:

And don't forget the AML/CFT Act 2009, and it's obligations and ramifications - especially for AFAs.
How many AFAs know about it, and when it comes into affect, AND what their obligations will be?

On 30 August 2012 at 11:13 am Amused said:

What was the outcome of the FMA actually been able to view our client files if the client themselves says no to the regulator looking at their financial details? As I understood it under the Privacy Act the FMA hadn't a leg to stand on if the client refused permission. Clearly the FMA hadn't thought that scenario through! Good Returns (Jenny or Phil) can you please let advisers (AFA/RFA) know what is happening on this subject? This topic seems to have gone off the radar in recent months and I don't personally recall hearing/reading any outcome when the question was raised last time.

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