by Susan Edmunds
It has released its latest Investigations and Enforcement Report, which shows in the year to June 30, there were 2701 inquiries made to the FMA and 839 complaints.
The inquiries primarily related to the implementation of the Financial Markets Conduct Act and the anti-money laundering legislation.
Complaints related to alleged scams, people providing services without registration or authorisation and custody of client funds. Of the 839 complaints, 68 were referred to the enforcement team.
The report said five reporting entities were asked to bring forward their first AML audits between six and nine months. Each reporting entity is required to be audited every two years, or as required by the FMA. The cost of these audits has been contentious – up to $2000 in some cases.
The FMA said the requirement for early audits was in response to concerns about their compliance with the AML rules. “In each case we used our power under section 59(7) to require the entities to provide us with a copy of the audit.”
It issued directions to a broker in response to concerns of potential breaches of obligations under the AML rules identified during a monitoring visit. “No client losses were identified, however there may have been a risk of future loss without action.”
The report shows the FMA also took action against industry participants under the Financial Advisers Act.
In the year to June 30, the FMA’s enforcement team was engaged in 76 inquiries and 29 litigation matters, including matters relating to the financial adviser regime – such as investigations into complaints regarding potential code breaches, and harm arising from non-compliance with the financial advisers and FSPR regime.
The FMA said it had obtained voluntary agreement from market participants to remedy breaches without the use of statutory powers, such as small businesses providing broking services, including DIMS, which agreed to outsource custody of client money and property to independent institutional custodians. “These small businesses recognise that this approach strengthens protection of client money and property.”
An insurance broker agreed to engage an accountancy firm to prepare compliant accounting records and financial statements and to review and report on improvements to systems and controls. “This followed our identification of shortcomings in accounting records and financial statements prepared by the intermediary. The firm’s recommendations were implemented.”
The FMA said it had more court cases in the year ended June 30 than in the year before, because of the completion of three finance company investigations and the increase in referrals to the Financial Advisers Disciplinary Committee.
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