The world after licensing

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Friday, March 11th 2011, 6:10AM 6 Comments

by FMA

It's been great to see how well engaged roadshow audiences have been. Most seem to be fairly well sorted in terms of licence application readiness and are putting the finishing touches on their Adviser Business Statements or Set C files.  They are also getting stuck into preparing for the new disclosure requirements. It's therefore no surprise that these advisers are now thinking about what happens next in a post-licensing world. When will the regulator visit me? Will they just arrive on my doorstep unannounced?  How much of my time will they take? What will they want to look at? Some thoughts on that: The Commission may contact an adviser any time. Several factors will influence who we choose to target, such as acting on intelligence or investigating a complaint, a risk assessment, investigating a particular theme (perhaps Kiwisaver sales practices for example) or simply knowledge building about this industry. So a visit by the regulator won't necessarily signal a problem. This is a newly regulated industry. We need to focus on the areas where there's the risk of greatest harm, ideally picking them up early. To do that we have to correctly identify the main problems through a combination of intelligence gathering, signals picked up from complaints received and the fact-finding we do through our monitoring programme. In most cases you'll get good notice of a visit and generally the precursor will be a request to send us your ABS. So the first thing you can do to reduce the likelihood of a visit or a request for more information is to adequately address the matters we ask for in your ABS. The ABS is about you the individual, how you have thought about your obligations under the law, the Code and the Terms and Conditions and how you will comply.  We're more interested in knowing about your advice process and what you personally do than the business itself. Make sure you read the AFA ABS Guide to help. We've updated the tables in the back to reflect the final Code's 18 standards and the standard terms and conditions. What we do once we're in your office depends on the reason for our visit. We may be concerned about a particular aspect of an adviser's compliance. We may wish to verify that an adviser is doing what their ABS says they're doing. Or it may be a discussion about an industry-wide theme we're interested in understanding better. We understand this is new territory for everyone. Those who behave like professionals can expect to be treated as such. The Commission will be helpful towards those who take compliance seriously and are clearly on board with the spirit of the law for the benefit of their clients.

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