If the FMA comes knocking can you supply docs in time?

As the era of scrutiny, regulatory compliance and audits expand, how to navigate the murky waters of Financial Markets Authority (FMA) audit-readiness has been a growing concern for financial advice providers (FAPs).

Tuesday, June 27th 2023, 3:37PM

by Kerry Meadows-Bonner

Addressing these anxieties, The Adviser Platform (TAP) recently launched its audit confidence check tool, designed to equip FAPs with an understanding of their readiness for the FMA's monitoring reviews.

Under the FMA's new regulations, advisers must provide an assortment of business data and supporting documents demonstrating their compliance with license obligations. The new tool offers an immersive simulation of a monitoring visit.

TAP managing director, Ryan Edwards says from his observations, adviser interactions with internal auditors and the FMA have been lacking. He notes that the majority of advisers are not engaged with the auditing entities and face challenges in assembling the required documentation within the typical 10-day notice period.

He believes that the audit confidence tool will illuminate areas of improvement for FAPs, encouraging proactive modifications to their audit preparation strategies. Should the tool reveal an adviser's lack of audit readiness, TAP can provide solutions to get them back on track.

Edwards says a FMA monitoring visit usually entails requests for comprehensive reports about business operations, client engagement, and advice records. He says FMA expects to receive these documents within 10 days. The monitoring visit, generally, takes place four to six weeks later.

He emphasised the importance of having robust systems, processes, and reporting capabilities that can withstand a quick and thorough audit. He says there is a vast disconnect in the market, where advisers claim to have policies and processes in place, but often struggle to provide tangible proof of their adherence to these systems.

“The motivation behind the tool's creation was wanting to help FAPs understand what will be required of them when they receive a request for a monitoring review from the FMA. Highlighting the challenges FAPs face in swiftly gathering required documentation while maintaining their daily business operations.”

The audit confidence check is a simple, high-level self-assessment tool that allows advisers to evaluate their confidence in producing and interpreting relevant business reports.

As regulatory compliance becomes a non-negotiable aspect of the finance industry, TAP's tool promises to aid advisers in seamlessly integrating compliance into their daily operations. This not only eases the burden of audit preparation but also aims to enhance the overall business efficacy.

Are you audit ready? Take the pre-assessment tool checklist here.

Tags: TAP