Financial Markets Authority CEO, Rob Everett, has emphasised the importance of documenting advice during a panel discussion on conduct and client care at the recent Financial Advice New Zealand 2019 Conference.
Adviser Business Compliance Director, Gavin Austin, raised his concern on the lack of record keeping among adviser businesses earlier this year (see: Record Keeping Still Vital Under New Code…).
Speaking on implications that the FMA sees for financial advice in New Zealand, Everett said the AFAs have moved in the right direction but for QFE’s, “…what we’ve seen just isn’t good enough. The sorts of controls we have expected them to be building and evolving over this period, we see them as patchy and in some places ineffective.”
For RFAs, he added: “We see some good RFAs; we see some who currently quite operate a long way away from the standards that are going to be required and we know that there are lots of RFAs that we just don’t see at all – for good or bad that will need to change.”
But he emphasised that for all of those groups, “If you don’t comply with the obligations to be able to demonstrate what advice was given and why, we are going to assume the worst. For all forms of advice, from whatever source, escaping from regulatory oversight because you haven’t properly documented your advice and your processes just cannot be acceptable.
“If you don’t comply with the obligations to be able to demonstrate what advice was given and why, we are going to assume the worst.”
“So the key here obviously is that we can develop a sense of comfort as the regulator that the clients’ needs are being met. This next period is going to be challenging for everybody, us included. But the goal is a good one – the goal is more, better and better-regulated financial advice for New Zealanders and I am positive that goal is attainable,” said Everett.
Chairman of the Financial Advisers Disciplinary Committee, Hon Sir Bruce Robertson KNZM VGSM, was also on the panel and commenting on record-keeping among advisers said “…the few cases which we have seen, the lack of record-keeping has been a major problem.
He said the Committee has seen time and again those who haven’t kept records in the first place or when they have kept records and provided disclosure and information it has not been in a way in which the client can understand.
“Too often we talk about communicating with people – we are talking about what I say to you, but that is only ever half of a communication. Your listening is an equally important part of it,” he said.
“Always remember that what you need to be doing is getting alongside your client and making sure they understand what they are committing themselves too.”
Click here to read the wrap story of Financial Advice New Zealand’s 2019 Conference.