If you are a new FAP director and don’t fully understand the scope of your obligations then Melanie Purdey says it’s time to get up to speed with what the FMA expects to see in a compliant financial advice business.
“Abrogating your obligations can be costly – to your clients, to you, to your professional reputation, and your employees,” says Purdey, who joined Compliance Refinery in July to lead its Director Support Programme.
“A prudent director will want to know what reckless trading is, understand and manage conflict of interest appropriately, and understand their reporting obligations,” she says.
“It’s not hard to be a good director and ensure you have sustainable processes for the FAP. And it’s not hard to find good support to help you do this.”
Purdey recommends FAP directors invest in finding trusted specialists who can help them put robust business management systems in place and adhere to rules of good governance.
She says that by now FAP licensees should have solid systems in place that meet the regulator’s requirements, have a complaints process established, and a CRM system to record anything to do with your client advice conversations.
“As an industry we’ve spent considerable time talking about advisers’ obligations where their advice processes and systems are concerned,” she says.
“Many are operating under an active regulator for the first time – and with that comes a whole new set of legal obligations.
…good directorship can add value to your business…
“Being a director comes with a set of obligations. And just as good advice can add value to your clients’ financial wellbeing, so good governance can add value to your business.
“You may or may not have shareholders, but you will certainly have stakeholders – your clients, providers, FAP group, etc – who will be impacted by any failure to ensure the business is run well and proactive about its obligations.
“Like advice – where advisers conduct the fact find, analyse, recommend, implement, and review – good governance covers almost the same areas in four recognized pillars – as set out by the Institute of Directors:
- The setting of a clear purpose and strategy for success of your business
- Building a high-performing culture that builds your brand by ensuring values are agreed and acted upon
- Holding yourself, your team, and your processes to account
- Fulfilling your compliance obligations as a director or board
Purdey recommends FAP directors invest in professional training to ensure they have the “skills and experience” that FAP full licencing requires, and seek trusted specialists who can help them put robust business management systems in place.