First monitoring feedback complete

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Wednesday, July 13th 2011, 5:00AM 8 Comments

by FMA

Amongst the comments we’ve seen in recent days, we’ve seen a challenge for us to give advisers more guidance on what we expect from them. That process started some weeks back when a small group of the first AFAs were asked to send us their Adviser Business Statements. To recap, the ABS is intended as an efficient way for you to record evidence that you’ve thought about your obligations and for FMA to understand the business you do.  It’s important to emphasise that the ABS does not represent our entire monitoring methodology.  It’s just one tool.   Our early monitoring work, including ABS reviews, has two objectives: 1.      Assess the range of advisers and advice practices in the industry, so that we can prioritise our future monitoring work and resources 2.      While regulation is new, many advisers will need additional help to understand exactly what the obligations mean. Making the expectations clear and ensuring advisers understand the next steps they need to take are important investments we are making in the early stages of this brand new regime.   We have just completed a review of the first batch of ABSs, and in the main it has achieved what we wanted.  At this stage of the regime, an ABS is a window into how an adviser interprets and performs their legal and professional responsibilities.  Our initial selection covered a wide range of business models, including AFAs who don't spend all their time providing retail investment advice.   Generally advisers have responded constructively and in good faith to the feedback. If you were one of those advisers, thank you. Your attitude speaks to your engagement with the new regime and is likely to result in a smooth relationship with the regulator.   Overall the documents gave us good information, though some, perhaps through efforts to be succinct, had compliance gaps or did not do justice to what is actually happening in their business. How advisers deliver their advice/service is the key point, so we asked for more information on this in most cases. Discussions with the first group of advisers about their ABS helped fill in these types of gaps and allowed us to complete the assessment.  We trust it has also given the advisers a better understanding of the sort of processes we’re looking for the document to describe. To most of the first advisers selected we've said, 'thanks and bye for now', letting them get on with running their businesses. We intend to provide wider feedback to the AFA industry once we've reviewed a few more ABSs. Mel Hewitson

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