Property tutor’s AFA rejection upheld
A high-profile property figure has failed in his appeal against the Financial Markets Authority's decision to reject him as an Authorised Financial Adviser.
Tuesday, April 24th 2012, 3:56PM 
5 Comments
by Niko Kloeten
Sean Wood, the owner of property seminar and education business PropertyTutors, wanted to become an AFA in order to provide advice on more complex investment products and offer investment management and planning services.
The FMA denied his application on October 21 last year, determining he was not a person of good character after he failed to disclose convictions under the Building Act.
In what is understood to be the first case of its type since the new regulatory regime came into force, Wellington District Court Judge Stephen Harrop has ruled in favour of the FMA.
The judge wasn't swayed by Wood's argument that he didn't realise his convictions, for unconsented building work and failure to comply with a notice to fix in relation to a property in South Auckland, would be relevant to the AFA process.
"Mr Wood's failure to disclose convictions and, more importantly, the fact of his conduct behind the convictions and his attitude to compliance with the law, mean that he is not of good character such as is required to be an AFA," Judge Harrop said in his decision
"The FMA quite properly came to the conclusion, in effect, that the adverse inferences it could and did properly draw as to his character meant that it could not be satisfied that he would comply with the onerous documentary, ethical and fiduciary obligations with which an AFA must comply."
FMA head of primary regulatory operations Sue Brown said it was important that applications to become an AFA were assessed rigorously.
"The Financial Advisers Act seeks to promote high standards of professionalism and integrity. FMA's role is to ensure that applicants have the insight, knowledge and attitude necessary to uphold and respect those standards."
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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Comments from our readers
Why is the registration process not serving as a gatekeeper (like teaching, or medical)? OK, so 'good character' to be an AFA is now well defined and tested. Whether or not AFA becomes 'the standard' we all have to get to, the good character test should apply to everyone.
And if a few building consent issues set a benchmark, a dishonesty conviction must mean you are absolutely unsuitable to be an adviser. Whether AF or RF comes before the A!
Now then, there are a couple of AIL agents who need to go. Sure they can't be AFA, but come on.... if the intent is to improve the industry for the betterment of the good old consumer then what is the govt doing letting people like that register?
HOWEVER, how many people have taken the time to read the full transcript of the case, and the reasons for the building code convictions? After reading it myself, I understand the convictions were for him failing to follow a procedure that he believed was unnecessary. He wasn't convicted for unsafe practices, he was convicted because he would not follow a rule he believed was ridiculous. However, after his conviction under the building act, the procedure was changed to reflect the stupidity, and under the subsequent amendment he would not have been charged.
Therefore, it could be said he stood up for his belief, took the hit for the building industry, and changed the rules. But in the process he destroyed his chances of further advancement and he is now prevented from following another career according to the rules.
This is just another point of view. I wasn't there - I don't know all the facts, so my view is only based on what I have read. But it should serve as a warning for anyone (and we all know of people like this) who are prepared to stand up for what they believe.
All you tall poppies out there - DUCK!!!
Why this amuses me is reading the Herald on Sunday the FMA spokesperson said direct property investment advice was not covered, so he didn't have to be an AFA. He has been a bit foolish in taking something private (i.e. his AFA rejection based on his bad character that no-one knew about) to a public forum, in the Courts. This was presumably to satisfy his ego and to get some letters after his name as he is not the type have been at Uni. He would have thought (no doubt with nudging on from his lawyers) that a judge would take his side. I bet they didn't take into account the adverse marketing and financial implications this appeal is likely to have on him.
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Now looking forward to the FMA applying the fit & proper person test to a number of other high profile individuals who are currently involved in NZ Financial Services