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FMA kicks-off monitoring reviews

The Financial Markets Authority (FMA) has begun monitoring Authorised Financial Advisers (AFAs), calling for Adviser Business Statements from a selection of AFAs.

Friday, May 27th 2011, 7:07AM 1 Comment

Director of Financial Adviser Regulation, Mel Hewitson, says as monitoring activity increases, AFAs may be selected for an ABS review, an interview or a visit as part of random checks, in response to information received about their business, or because FMA is investigating a particular theme across the industry.

"Regulation is new for advisers so our focus in these early months is on giving feedback to help all advisers understand and reach full compliance with their obligations," Hewitson says.

"If initial monitoring indicates advisers need more guidance, FMA is likely to issue hints and tips for all advisers.  Expect us to be clear, fair and transparent about our regulatory expectations.  However, repeated errors may indicate some remedial action is due."

Hewitson also warned that if FMA does find deliberate or reckless misconduct, or if there is evidence advisers have intended to deceive or defraud, action will be taken.

"It's important for public confidence that we take a tough enforcement approach in these situations."

FMA has the power under the Financial Markets Authority Act 2011 to require the production of information and documents held by any person for the purposes of performing its functions.

"I'm aware some advisers have been concerned about the privacy implications of that power so we are developing information we will send before any visits begin so advisers know what to expect," Hewitson says.

In the mean time, as a matter of good practice, she suggests advisers could tell clients their files may be viewed by FMA. 

Hewitson notes that in line with the principles-based approach of the regime, the monitoring team will not be taking a line-by-line audit type approach to reviews.

"Our litmus test will always be, ‘how is this good for the customer'," she said.

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Comments from our readers

On 27 May 2011 at 9:49 am JAFA said:
Presumably the inspectorate will also provide AFA's with Disclosure Statement of their qualifications, experience abnd suitability for the job.
Remedial trainining is a must. Advisors, investors and the public were greatly mislead as to the competency of their precursor, The Securitise Commission.
Commenting is closed



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