FMA keeps eye on RFAs

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Reports of misconduct by registered financial advisers are a priority for the FMA over the next four years, it says in its latest Statement of Intent, tabled in parliament yesterday.

Friday, June 19th 2015, 6:00AM 1 Comment

by Susan Edmunds

The FMA says when consumers and investors buy financial products they should be treated fairly and put at the heart of the sales process.

“We will focus our regulatory activity on processes that are likely to result in poor outcomes for investors and consumers. We are particularly focused on addressing the mis-selling of financial products and will also prioritise reports of misconduct by registered financial advisers," the statement says.

It notes that the 6500 RFAs in the market serve a substantial number of retail consumers and investors.

“Through our monitoring of organisations, we aim to lift the quality of financial advice and sales processes. We expect businesses and professionals to treat their customers fairly, with their sales processes and advisory services reflecting the best interests of investors and consumers.”

KiwiSaver sales will come in for scrutiny and the FMA says it will regularly report on the percentage of market participants who are asked to take corrective action on their sales and advice processes.

“Market participants who focus on improving sales and advice processes are more likely to ensure better outcomes for their customers.”

FMA says its monitoring will be driven by complaints and action will focus on areas that pose the most significant risk to the development of fair, efficient and transparent markets.

It has identified vertically-integrated distribution models as a situation where conflicts of interest can arise and will be examining those.

"Remuneration and fee arrangements, for staff or salespeople, may also exacerbate this risk. We have identified distribution models and remuneration arrangements, as well as custody of client money and property, as key areas of regulatory focus."

Chief executive Rob Everett said this year’s SOI was a major shift for the FMA.

“Ultimately, [the strategic priorities] are designed to ensure that the government, businesses and investors can hold us to account in implementing the Financial Markets Conduct Act and providing effective regulation of New Zealand’s financial markets. They also provide a greater level of transparency around what we see as important areas of regulatory focus for the FMA and what behaviour we expect,” he said.

The review of the Financial Advisers Act is identified as another key focus.

Tags: FMA

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