The FMA has cancelled the transitional financial advice provider (FAP) licence of Wisdom House Investment Partners after its “sole financial adviser engaged in serious misconduct at his previous employer”.
James Greig, FMA Director of Supervision, says: “Trust in the financial advice sector is imperative and any misconduct that undermines that must be held to account.
“A licence cancellation is a strong regulatory response and we decided it was necessary in this case to send a strong message of deterrence.”
A statement issued by the FMA says Wisdom House is solely operated by Yuen Pok (Paul) Loo, who established the business after his contract was terminated by Wellington-based financial services firm FoxPlan.
The company was censured by the FMA in July 2021 because, among other breaches, one of 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 that 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,” states the FMA.
“Additionally, Mr 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 says it is not aware of any clients suffering a financial loss because of Loo’s misconduct.
Loo’s misconduct was discovered during an FMA monitoring review of FoxPlan. The company considered Loo had breached his agency agreement and the firm’s internal policies, which led to his contract being cancelled.
A spokesperson for the FMA says it was first made aware of the possibility that Loo engaged in misconduct in late 2020, as part of its monitoring review of FoxPlan.
“Wisdom House’s transitional licence was approved in January 2021 because it satisfied the criteria,” says an FMA spokesperson.
“At the time of issuing, we didn’t have enough evidence or information to be satisfied that Mr Loo had engaged in the misconduct. In accordance with the principles of natural justice and a robust process, we wanted to give Mr Loo the opportunity to explain himself.
“Following submissions from Mr Loo, we decided to cancel Wisdom House’s transitional FAP licence in November 2021. If we didn’t grant the transitional licence, Mr Loo wouldn’t have been able to earn a living as a financial adviser from March 2021 due to the new financial advice regime. We were still able to continue our investigation in this period.”
Loo acknowledged his misconduct and showed remorse, says the spokesperson.
Wisdom House’s licence was cancelled on 10 December 2021. Mr Loo is informing his clients and affiliated product providers of the licence cancellation.