First adviser heads to disciplinary committee

Advisers, both authorised and registered, have been warned by the Financial Markets Authority that enforcement will be tougher this year.

Friday, April 19th 2013, 6:00AM

The FMA head of primary markets, Sue Brown, says the authority has started the process of taking some advisers to the Financial Advisers Disciplinary Committeee (FADC).

The committee was set up as part of the new regulatory regime and is independent from the FMA. However, if a complaint is made against an adviser and the FMA decides there is a case it can then take a proceeding to FADC.

Although FADC has been in existence for nearly two years it is yet to hear a case.

Brown says that the FMA is finding that there are a group of advisers who appeared to be willing compliers with the regulations but are in fact becoming non-compliant, or less willing. Some, she says, are heading towards reckless disregard of the regulations.

She says one of the first cases is an adviser who was identified in its monitoring programme as having some issues with compliance. That adviser, she says, made some assurance around changes, but when the FMA checked again there had been no changes.

Brown says that she expects the FMA will be more active in banning advisers and removing licences in the future.

Also it has powers to take "administrative action" against advisers and this will be used. She didn't explain what sort of things come under the "administrative action" banner.

Brown also said the FMA is moving away from a tack box approach to assessing AFAs to a more holistic approach based on customer outcomes.

She says sometimes when the FMA is assessing an adviser they have to ask whether that person is acting within the intent of the law rather than having a tick box saying they have done a quantified task. For instance the adviser may not have quite met the full requirement for the number of hours of CPD credits, but had demonstrated they were undertaking professional development.

Brown also warned that the FMA was going to put more attention on monitoring Registered Financial Advisers. She wouldn't dislose what areas the authority was looking at but noted that the FMA has looked at the insure of churning life insurance policies.

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