FMA offers assistance over FAP “areas of concern”

The Financial Markets Authority (FMA) says it wants to help advisers overcome a pattern of inadequate record keeping in the past.

Friday, May 27th 2022, 8:37AM 4 Comments

by Eric Frykberg

To do so, it has issued new guidance for financial advice providers (FAPs) about how to demonstrate compliance with record keeping obligations.

The rules apply to both transitional FAP licences and full FAP licences.

They state that people must create and maintain adequate records in relation to their services in a timely manner.

To help advisers do this, an information sheet has been provided.

It provides an overview of record keeping obligations and sets out areas for FAPs to consider when reviewing their record keeping practices.

The information sheet includes practical examples of how this should be done.

The move follows worries about the quality of record keeping in the past.

“Our monitoring of the previous financial advice regime consistently identified poor record keeping as an area of concern,” said the FMA's Director of Supervision, James Greig,

“This included insufficient records about the services provided to clients and incomplete information on whether key obligations had been fulfilled.”

Greig said good record keeping helped financial advice providers demonstrate that they were serving client interests.

He added many financial advice providers were adapting their processes to comply with the rules, and he was issuing this information sheet to help out.

The information sheet is here

Tags: FMA

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Comments from our readers

On 27 May 2022 at 12:39 pm Murray Weatherston said:
I'm thinking of setting up a secure storgae facility for the keeping of FAP and adviser records.
I wonder how much stuff will need to be kep for a long long time. Std condition
requires records to be kept for 7 years from the longer of :
1.the date the record is made; and
2.the date the financial advice to which the record relates is given; and
4.the date any later record is made that refers to or relies upon information in the record; [a review in y5 that refers to initial advice = 12 years
3 the date of the conclusion of the life of the financial advice product that the financial advice relates - think of WOL insurance or a Kiwisaver investment
On 27 May 2022 at 12:59 pm T said:
Perhaps some clarity around "timely", given to what is deemed to be "timely" given it can regularly take over 1 hour for Insurers to answer phones/chat queries and provide correct answers, weeks to get comparison information and quotations from the Insurer - thinking this would not meet "timely" or would it?

Any delays in assisting us to provide the information delays our "timely" response or does it? - assume we all including clients have different definitions of "timely".

This document is no clearer in assisting us to not breach or know if we are breaching.
On 28 May 2022 at 5:56 pm w k said:
"If you can't explain it simply, you don't understand it well enough."
maybe this explains the regulations.

“Insanity is doing the same thing over and over and expecting different results"
is having the same people to rectify the situation.
On 31 May 2022 at 5:10 pm Brian W Brown said:
If you want to know why so many are leaving the industry then reading the 9 pages on just this area of compliance a couple of times will give you a bit of a hint i would think.

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