Financial advice provider gets reprimand for licence obligation breaches
Financial advice provider gets reprimand for licence obligation breaches | Insurance Business New Zealand
Life & Health
Financial advice provider gets reprimand for licence obligation breaches
Shortcomings include failure to ensure clients understand the advice
Life & Health
By
Terry Gangcuangco
Christchurch-based financial advice provider (FAP) Go Financial Solutions has been censured by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko for failing to comply with several FAP licence obligations, including ensuring clients understand the advice they receive.
In a release, the watchdog noted that Go Financial Solutions – a FAP with a focus on health, life, and business insurance and mortgage lending – failed to exercise care, diligence, and skill when providing financial advice to its clients, based on a monitoring review.
According to the FMA, Go Financial Solutions was unable to demonstrate that its recommendations to clients were suitable. It was found that the FAP had inadequate records in relation to the advice it gives, with client information (including medical circumstances) and disclosures being incomplete.
Go Financial Solutions, which caters mainly to the Filipino community, is now required to submit an action plan to the regulator. The company’s breaches span Standard Condition 1 of its FAP licence, Code Standard 3 and Code Standard 4 of the Code of Professional Conduct for Financial Advice Services, and Section 431L of the Financial Markets Conduct Act 2013.
“Financial advisers are required to exercise care, diligence, and skill in their work; it is clear from the conduct we observed in our monitoring at Go Financial Solutions that this did not occur,” Peter Taylor (pictured), FMA director specialist supervision and response, said.
“These failures were serious and had the potential to cause harm, particularly for clients with vulnerable characteristics like English as a second language. Clients are entitled to trust their financial adviser, and its conduct breached that trust and could erode the public’s confidence in financial advice providers.”
Taylor stressed that FAPs are expected to meet their obligations and to have good customer outcomes as the central part of what they do.
He added: “Consistently delivering good outcomes requires sound systems, controls, record keeping, being disciplined about meeting compliance obligations, and good disclosure. It needs to be part of an organisation’s culture, including setting clear expectations and leading by example.”
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