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FMA outlines Enforcement priorities

The distinctions between what an RFA and an AFA can advise on, as well as the licensing of all financial advisers, will be among the priorities for the Financial Markets Authority (FMA).

Wednesday, September 14th 2011, 7:02AM 8 Comments

by Benn Bathgate

In its Enforcement Policy release the regulator has outlined what its early priorities are, saying one area of focus will be compliance with licensing regimes such as the registration of financial providers and the licensing of financial advisers, a requirement from July 1, 2011.

"We will also actively monitor and enforce the boundary between unregulated and regulated activity, particularly in relation to the financial advisers regime."

FMA chairman Simon Allen also highlighted KiwiSaver as a specific area of interest, citing the number of New Zealanders in the scheme and its role as a fundamental plank of retirement savings strategy.

"We will focus on KiwiSaver sales and distribution practices and will act decisively against any evidence of misconduct in this part of the market," he said.

Allen also outlined areas at the other end of the priority spectrum, saying the Enforcement Policy would be transparent about the factors it will weigh when deciding not to pursue every breach that comes to its attention.

He said the FMA would set cases aside when enforcement would not be justified in the public interest, when opportunities exist for more appropriate intervention - such as referral to the Serious Fraud office - and when the breach was a one-off, isolated case.

The FMA would also be unlikely to intervene with matters "more appropriately resolved directly by dispute resolution schemes or between private parties as a matter of contract."

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to

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Comments from our readers

On 14 September 2011 at 1:41 pm DFA - Directory of Financial Advisers said:
I have already come across Advisers not registered and giving advice, one even said I don’t have to be “I’m a private banker” yet he doesn’t work for a bank.

Some Advisers have their company registered but not registered as individuals – in one case 5 Advisers in the same company - none of them registered.

I find it astounding that some Advisers still do not know their obligations under the FAA.

It will be interesting to see what enforcement action the FMA takes.
On 14 September 2011 at 2:58 pm btw said:
They are getting to them. I presume everyone is doing their bit by notifying the FMA as they come across these cowboys? FMA need every bit of help they can get. I've got them on speed dial myself!
On 14 September 2011 at 4:05 pm EasyBank said:
The FMA will smoke any unregistered advisers out of their caves.
On 14 September 2011 at 4:16 pm Dirty Harry said:
Complaint lodged with FMA re adviser approaching clients who is registered, but not in DRS, reason: "not providing advice to retail clients"

who was providing advice to retail clients.

They have done precisely nothing.
Still advising.
Still on FSPR as per above.

It's more than 10 weeks since 1 July. So has the Sheriff actually shown up for work yet?
On 15 September 2011 at 8:38 pm Amused said:
Hi Dirty Harry, I was under the impression that all advisers HAD to belong to a DRS before they could register on the FSPR? Since the 1st July it seems the FMA is simply content to nitpick adviser business statements from AFAs and hand out score cards to QFEs (all of whom are operating lawfully) rather than roll up its sleeves and actually accomplish something i.e. going after the loan sharks etc who remain unregistered.
On 16 September 2011 at 12:31 pm Dirty Harry said:
I thought the same, but alas we have a couple of examples where advisers are shown as Registered Financial Advisers on the FSPR, with their details stating in the space that is supposed to show their DRS showing instead that they are not in a DRS.

I have of course highlighted these people through the complaints form, informing the FMA that these individuals are practicing advisers, and both have since changed their details to the reserve scheme.

The big question is why were they on the FSPR like that in the first place?
On 16 September 2011 at 3:35 pm Curious said:
As I understand it you can be on the FSPR and not a member of a DRI if you are only providing wholesale advice.
On 16 September 2011 at 8:01 pm Amused said:
That's a very good question Dirty Harry. Perhaps someone from the FMA would be kind enough to explain that to us? Seems like the regulators where only too happy to collect the registration fees from these advisers but the required checks went out the window as far as them belonging to a DRS. Fantastic. As you mention they were clearly giving advice to retail clients so had to belong to a scheme from 1st July. Any excuse that they didn't know they had to belong is frankly BS. I presume that now you've made the FMA aware of this they will be prosecuting these individuals and bringing them before a disciplinary committee as is required under the FA Act? If not why not?? Didn't we hear the FMA saying they wanted a few adviser "scalps" as examples to others?

Next question, what does it say about these individuals and them been financial advisers in the industry that they would knowingly try and avoid belonging to a DSR when it was a requirement by law? Fantastic to see that regulation has indeed gotten rid of the cowboys as the FMA likes to boast! I pity the clients that get financial advice from these chaps. You can just imagine what kind of service they are providing.
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