[Weekly Wrap] Thoughts on the Adviser X case

Friday, June 6th 2014, 3:49PM

Undoubtedly the attention this week has been on latest ruling made against a financial adviser by the Financial Advisers Disciplinary Committee (FADC). Just to recap a QFE essentially dobbed in one of its AFAs (Adviser X) to the Financial Markets Authority. The FMA took this particular person to the FADC who found against him.

The punishment seemed pretty harsh and included the loss of his ability to sell his book of clients to the QFE, nine months out of work, and although he has more than 20 years experience as an adviser he now has to work under supervision.

People have asked why couldn't this have been sorted out internally without going to the FADC? We have been told that the QFE has a responsibility to inform the FMA of such breaches. This QFE has done this previously but none have progressed to the FADC stage.

It wouldn't be out of line to question this. Indeed the FADC did wonder why the case had got to a hearing.

Watching the FADC evolve is interesting. We do have some concerns about it operates. For instance we have asked the registrar a number of times for information, yet haven't had any responses. Frankly this is pretty poor form.

Likewise, the FADC does not operate with anywhere near the openness of the judicial system. A good example is this particular case which only added to the hearings part of the FADC site a couple of days before the actual hearing.

One of the themes emerging in parts of the broader advisory industry at the moment is changes to some of the groups. We've seen insurance dealer groups get together, mortgage broker groups find new homes and partners, and in the investment space we understand advisers associated with Spicers in Hamilton have left. It has been confirmed from a number of reliable sources, however when we contacted them to find out why we got an immediate "no comment".

Another theme which came up in stories this week included what we would put under the fixed income label. Yesterday a settlement with failed finance company Strategic Finance was announced. Interestingly the Herald reported in it today with the angle where the FMA was defending its use of confidentiality clauses which means no-one, publicly, knows who paid the settlement money.

In this fixed income space we are seeing more debt offerings from organisations like banks. Grosvenor Financial Services chief investment officer David Beattie makes some very strong comments warning people to be careful as the risk/reward equation doesn't stack up. He made the comments at the SiFA conference last week and they were pretty much supported by Harbour Asset Managing managing director Andrew Bascand.

Weekly Wrap continues here





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