FADC releases decision on financial adviser conduct case

by Roxanne Libatique21 Jan 2021

The Financial Advisers Disciplinary Committee (FADC) has released its decision on the case initiated by the Financial Markets Authority (FMA) revolving around the alleged breach of the Code of Professional Conduct for Authorised Financial Advisers (Code).

The respondent, an authorised financial adviser (AFA), provides a range of services including financial advice, financial planning, investments, mortgage broking, KiwiSaver, retirement planning, residential property management, and personal and small business tax advice through her business. She trades under three businesses, one of which was registered on the FSPR in 2011 as an employer or principal of a financial adviser and/or qualifying financial entity. In 2018, the FMA received a complaint in respect of the AFA’s financial adviser practice.

The FADC found the AFA breached standards 12 and 15 of the Code, which concerns keeping information about personalised services for retail clients and the requirement to have adequate knowledge of the Code, Act, and laws.

“The Committee is forced to conclude that the respondent had a somewhat idiosyncratic approach to record-keeping and generally did not respond to the requirements of the Code with sufficient rigour. We repeat this was not sinister, but there was confusion and some conflating of approaches and demands, which is regrettable,” the FADC said.

Regarding personalised service, the FADC said: “We are led to the inevitable conclusion that the respondent does not have a sufficient grasp or understanding of this critical concept. As previously noted, there seemed to be a misplaced belief that unless and until the entire circumstances of a client were before her, she was not providing personalised service. That is not what the Code prescribes. A personalised service can be provided when only part of the environment is available.”

The FADC requested both parties submit what action it should take and advise whether that party wishes to be heard on its submissions or call evidence related to its submissions.

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