It seems the FMA was pretty keen on a scalp in the life insurance sector and it was presented with the opportunity to get one in a way many wouldn't have expected.
The adviser at the centre of the case is an Authorised Financial Adviser who did, it appears, a good deal of life insurance. Indeed he specialised in providing cover to people in the building trade.
About five years ago he sold some of his book to a Registered Financial Adviser; who then became the complaint in this case.
This was based on information for Client 1 who is described in the FADC decision as being "cavalier in a number of aspects of his evidence and surprisingly glib about matters as important as medical disclosure."
Counsel representing the FMA, Michael Hodge, admitted to the FADC hearing that this case was at the low-end level of alleged offending.
It's "not a high end case," he said. "It's at the lesser order of seriousness,"
It's interesting that in the eight years since the FADC was established it has only produced 12 decisions in nine cases. With this track record you can argue that the AFA population in New Zealand has been pretty well behaved.
Originally seven charges were alleged, but when it came to the hearing that had reduced to two and also the FMA withdrew charges alleging a breach of Code Standard 12 and limited them to CS 8 (the old version) which related to not keeping good records.
At the hearing there was no shortage of documents, indeed there were two rather large bundles of documents.
Perhaps most concerning is that some of the client documents had been destroyed at some time after the books of business were sold.
It's worth pointing out too that there was no advice expertise amongst the three committee members who heard the case; Two were from the legal profession and the third's career was "focused on providing investment research to fund managers’ globally."
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