The sheriff is coming
Advisers have been given notice that the Financial Markets Authority is starting up a programme of adviser monitoring visits next week.
Friday, August 26th 2011, 9:05AM 
11 Comments
The FMA says it will begin making visits to Authorised Financial Advisers (AFAs) as it steps up its monitoring activities under the Financial Advisers Act.
FMA Head of Primary Regulatory Operations, Sue Brown said monitoring was an important part of the new professional era, enabling FMA to check that standards are being met.
“We expect that in most cases we will simply be helping advisers refine what are already sound practices. Where we see potential for improvement we will work with advisers to ensure they comply with their obligations under the Act.”
One aspect of visits that has generated enquiries from some advisers has been the implications of a visit for the privacy of client files.
“If an adviser has obtained their clients’ authorisation for FMA to view their files, for example, by acceptance of terms and conditions of advice that include information about FMA’s ability to view client files, they will not be in breach of the Privacy Act by providing information to FMA,” Brown said.
When advisers became AFAs they became bound under Standard Condition 4 to ensure that all records concerning their financial advice business, including client files, are available for inspection by FMA at any time.
When FMA writes to advisers notifying them of a forthcoming monitoring visit it will remind them of the obligation to have clients’ files available.
Any AFA who has not yet obtained clients’ authorisation should take all reasonable steps to do so before monitoring begins.
FMA has powers under section 25 of the Financial Markets Authority Act to compel an AFA to provide the information in client files. The provision of information in response to a section 25 notice does not breach the Privacy Act.
“FMA is hopeful we will not have to use this power on a significant number of occasions as most advisers will be well prepared for the start of monitoring visits,” Brown says.
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Comments from our readers
James - you are an idiot
Any legislation which overrides the client's own authority must be fundamentally flawed and I am sure somewhere a client will challenge the FMA's stance of "we can do what we like authroirty or not".
Given the FMA is supposedly there to help protect the consumer/client to ignore the consumers authroity would be self-defeating, would it not!
Isn't such a regulatory endorsement marketable?
Just a thought....
What irks me once again is the stance of the FMA. Brokers have to comply with the Privacy Act and are asking for some guidance as to their position, (like 'amused' I also recall this question being raised not that long ago). What do we get from the FMA? No clear legal ruling that we will not be in breach of the Privacy Act but a threat from them that we will be in breach of the rules pertaining to our being AFA's or RFA's. FMA PLEASE stop threatening at every available opportunity and start helping us all to comply with the variety of legislation in this country. We all want to aim for the best advise for the client.
I was working towards AFA and was 80% finished and now i am putting it all on hold.
I was told that it would be better for my business and we would all have to eventually get to this level.
Over the last few months i have had more clients come to me from an AFA than my clients leave me to go to an AFA.
The reason being better service and advice on Cat 2 products.
Also i know of a new Cat 2 product adviser who started business last month and has done no structured training at all, and he had no problem getting PI cover and has signed up agency's with 7 life cover companies, I don't understand how this can be done in this new environment ????
We have been told that there has been very few complaints that have come through to this point for existing advisers.
My concern is the new advisers starting, as apparently from my experience they can get PI cover and agency agreements with out any formal basic training.
Regulation has cost millions to set up and they seem to have missed this huge loophole......????
This would be so simple to fix.....if you haven't achieved the correct training points then no PI cover which means no life agency agreements which means no broker..... Pretty dam simple.
Half the problem is the PI cover providers and Insurance Providers not coming to the party in this new environment.
One last thing....How can a MikePerro adviser who is not an AFA sell Kiwisaver products, apparently this is the case???
Something not quite right here.
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