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FMA's power to investigate unclear

It is unclear whether the Financial Markets Authority currently has the power to review client files when investigates financial advisers.

Thursday, May 12th 2011, 6:55AM 6 Comments

Delegates at this week's Society of Independent Financial Advisers conference in Wellington questioned whether the Privacy Act would prohibit the FMA accessing client files.

FMA representative Julie Bottomley admitted that it was unclear at this stage whether the authority had the power to request client files.

She said the FMA was talking to lawyers at the moment.

"It's a priority" for the authority right now.

While the FMA has a statutory obligation to monitor financial advisers, Bottomley's fellow FMA member Gavin Austin said "the statutory powers we were given would be toothless" without the ability to see client files.

The FMA intends to release a fact sheet on Privacy Act issues.

Bottomley said the FMA has a team of eight people to monitor the advisory sector which is expected to have around 2000 AFAs and currently has more than 60 qualifying financial entities.

She said the FMA would be making sure that advisers were putting the first part of the code into practice and demonstrating that clients' interests were "first and foremost".

She said this is not just a "tick box" exercise.

Advisers will be given plenty of notice before the FMA does a review and it will conduct the reviews at an adviser's office.

It will review client files if necessary however it will "not jump straight to enforcement."

Bottomley and Austin both asked advisers to work with the FMA.

"If we can't lift standards together the FMA's job is going to be difficult."

"Please try and welcome us."

One adviser said he had heard comments that the FMA were like a pack of Doberman dogs straining at the leash to get out into the market.

Austin said that was not correct.

"Think of us more as the Labrador, cute and friendly."

« Mayhew and the malcontented Seven FMA role wider than preventing finance company collapses »

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Comments from our readers

On 12 May 2011 at 9:57 am Alison said:
Presumably this means advisors will have to include in their Disclosure doc. to clients a statement to the effect that "FMA bureaucrats have the right at any time to poke their noses into your private affairs and financial circumstances". Clients will love seeing that .........
On 12 May 2011 at 11:25 am risky said:
***k me - are you serious. They haven't even worked out the situation with the privacy act.
On 12 May 2011 at 1:46 pm btw said:
I think the big picture position is very well summed up by "#risky" above!
On 12 May 2011 at 4:48 pm Simon said:
I agree btw. Risky said what most advisers are probably thinking. The rolling circus continues...
On 12 May 2011 at 5:52 pm traveller said:
interesting. If I was a client, I would withold any authority to show my file to anyone, especially a government agency.( although I suppose the IRD can do anything!)
On 13 May 2011 at 12:53 pm Bazza said:
it has been common pratice for many advisers to include a privacy statement in their process which covers off client information be accessed by compliance audits or investigations by authorities.
Commenting is closed



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