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Adviser learns her fate from FADC

The Financial Advisers Disciplinary Committee (FADC) has handed down its penalty to an adviser who failed to keep proper records.

Monday, March 8th 2021, 7:10AM 5 Comments

The adviser at the centre of an FADC hearing in December last year has been censured for her breaches of two Code Standards.

However, the adviser, who can't be named, now calls herself retired and has told the Financial Markets Authority she will wind up her practice by March 31. Good Returns understands she had not applied for a transitional licence to operate under the new regime which starts next week.

The adviser was found to have breached Code Standards 12 and 15 of the Code of Professional Conduct for Authorised Financial Advisers. She had failed:

(a) In the case of three clients, to record in writing adequate information about a personalised service provided to a retail client.
(b) To demonstrate adequate knowledge of the relevant legislative obligations which result from the term ‘personalised service’.

The FADC said her breaches of the Code are less serious than other cases that had come before the committee.

"There is no suggestion that the Respondent has improperly benefited at the expense of her clients, or that any client has been disadvantaged. There are no previous findings of misconduct against the Respondent."

However, the breaches are "not to be treated lightly".

"Record keeping is a fundamental duty of an adviser that underpins the supervisory regime established by the Act and its importance cannot be minimised. It’s therefore important to sanction breaches where there are multiple instances of poor record keeping.

"There is a need to reinforce professional standards and ensure the profession remains conscious of the significance of proper records."

The committee said the breaches of the two code standards came down to a misunderstanding of personalised service, and the obligations providing a personalised service engages (including record keeping).

"Personalised service is a core concept in the Act: it is a gateway to many of the Act’s disclosure obligations (which, in turn, are central to the Act’s scheme for informing and protecting the public). A fundamental failure to understand what it means (and therefore when the ensuing obligations are triggered) means some disciplinary action is warranted."

The breaches of CS 12 and CS 15 come down to a misunderstanding of personalised service, and the obligations providing a personalised service engages (including record keeping). Personalised service is a core concept in the Act: it is a gateway to many of the Act’s disclosure obligations (which, in turn, are central to the Act’s scheme for informing and protecting the public).

"A fundamental failure to understand what it means (and therefore when the ensuing obligations are triggered) means some disciplinary action is warranted."

Tags: FADC

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Comments from our readers

On 8 March 2021 at 4:56 pm LNF said:
This and similar regulatory activity will cause an exit of talent from the industry and stop talented newcomers from becoming involved
On 8 March 2021 at 8:22 pm All hat no cattle said:
Sure, you've been Censured. Sure, you breached a couple of code standards. But OK, you can trade for a couple of weeks after the 15th when EVERYONE ELSE must have a licence or risk hundreds of thousands of dollars in fines....
Rules are made to be broken after all.

The FADC talks about "visible deterrence".
Or does it say, don't worry about the entire new regulatory regime that starts on the 15th if you are "planning to retire" some time after then?
On 10 March 2021 at 8:08 am JPHale said:
@all hat no cattle, agree. Compounded by a colleague being told this week that their new associate adviser registering on the FSPR can operate this week but can not operate from the 15th without having their FSPR registration approved...

They shouldn't be able to operate until on the FSPR, but hey the old rules were pretty lax...

It reinforces your point that this adviser while taking until the end of March to wind things up is not able to provide ANY advice from Monday the 15th without a FAP to operate under.
On 10 March 2021 at 12:35 pm Tash said:
Winding up a business does not necessarily require the prohibited action of giving advice after 15 March 2021!
On 11 March 2021 at 5:52 pm JPHale said:
@Tash, it does if there is no trans licence/FAP in play. The FMA has been quite clear on this...

Transactional information, sure, advice no.

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Last updated: 23 April 2021 8:50am

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