Adviser loses transitional licence

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The Financial Markets Authority (FMA) has cancelled a transitional advice licence for the first time.

Monday, December 13th 2021, 12:30PM 3 Comments

James Greig.

The FMA has cancelled the transitional financial advice provider (FAP) licence of Wisdom House Investment Partners Limited, after its sole financial adviser engaged in serious misconduct at his previous employer.

Wisdom House is solely operated by Yuen Pok (Paul) Loo. He established the business after his contract was terminated by Wellington-based financial services firm FoxPlan Ltd, which was censured by the FMA in July 2021 because, among other breaches, one if its nominated representatives provided services he was not permitted to give.

That nominated representative was Loo.

Loo’s misconduct at FoxPlan also included telling his clients he was an authorised financial adviser when he was not, and invoicing clients for advice using altered FoxPlan invoices so that FoxPlan’s clients would pay him directly - resulting in him misappropriating $36,029.98 from FoxPlan between 4 July 2018 and 4 November 2020.

Additionally, Loo wrote investment plans for clients that had not been approved or signed off by the firm.

Loo has subsequently returned the misappropriated funds to FoxPlan and the FMA is not aware of any clients suffering a financial loss because of his misconduct.

Loo’s misconduct was discovered during an FMA monitoring review of FoxPlan. FoxPlan considered that Loo had breached his agency agreement and the firm’s internal policies, which led to his contract being cancelled immediately.

As a result of Loo’s misconduct and the FMA’s enquiries, the FMA was satisfied that Wisdom House’s transitional financial advice provider licence should be cancelled.

Loo did not dispute the facts and acknowledged his misconduct and showed remorse. However, the FMA determined that Loo did not adequately address the regulator’s concerns and is not a fit and proper person to hold the position of director or senior manager due to the serious nature of his misconduct.

In addition, the FMA concluded that Wisdom House is likely to contravene its licensee obligations in the future because Loo is the sole director and adviser.

This is the first time the FMA has cancelled a financial advice provider licence.

James Greig, FMA Director of Supervision, said "a licence cancellation is a strong regulatory response and we decided it was necessary in this case to send a strong message of deterrence.”

Wisdom House’s licence was cancelled on 10 December 2021. Loo is informing his clients and affiliated product providers of the licence cancellation.

Tags: AFA FAP FMA FoxPlan

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