1 Comment 1 Commentby Susan Edmunds
The FMA has said it will reveal the results of its work into churn in the last quarter of this year.
It has written to insurance advisers who were identified as having high levels of new business, had some in for interviews and given a number of advisers guidance on where they were seen to be in breach of their requirement to provide advice with reasonable care, diligence and skill.
The advisers were then asked to report back on how those concerns were addressed.
But Russell Hutchinson, of Chatswood Consulting, said the process had highlighted significant problems with some advisers’ systems.
He said some had been giving advice without keeping a file. “That’s bad, they couldn’t tell you what advice they gave – they can see what the client bought but there’s no record of advice.”
He said some argued that there was no requirement for registered financial advisers to keep a record of advice.
Unlike authorised financial advisers, they are not subject to the code of conduct that requires record-keeping.
But Hutchinson said in such a situation it was impossible to tell whether the advice given was good. “It’s all very well having standards but if there’s no way of enforcing the standard, it’s meaningless.”
Those issues would be ironed out when all advisers were bound by the new code.
An update from the working group developing that code is expected soon.
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