How we monitor financial advice

 

We monitor financial advisers are complying with their obligations. We also monitor the activities of providers on the financial services 'perimeter' to ensure they are not providing services that should only be provided by financial advisers.

Monitoring and surveillance activities encourage compliance by all advisers. It helps to ensure a level playing field for advisers and will inform our development of policy and guidance.

We look at whether the actions of advisers are achieving the objectives of the Financial Advisers Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act.

We are particularly interested in the outcomes for customers and the approach taken to providing financial adviser services - processes, materials and how financial advisers operate.

If we do encounter a problem, we will generally work directly with the adviser to help them meet the required standard. However, we may also take action including enforcement action when standards fall below the required level.

Find out about our current monitoring and surveillance activities for:

RFAs, AFAs, QFEs and their advisers operate within the financial adviser regime. But with laws implemented on 1 April 2011 and 1 July 2011, a number of providers may still not have taken the necessary steps to be registered or authorised. Others may be hoping they can continue to operate illegally without being noticed. We refer to these people as trying to operate outside the 'perimeter' of the regime.

FMA's current monitoring and surveillance focus for perimeter providers is as follows:

  • encouraging the public and other advisers to report providers who may be operating outside of the rules
  • following up complaints or queries received; consequences for non-registration or false advertising are serious (up to 12 months in jail or $100K fine) so we need to do a thorough investigation
  • proactively checking those who advertise financial adviser services are registered through web-based research; other tools at our disposal include mystery shopping, visits and reviewing documents.

We have also made clear to product providers and professional associations that we expect they will put in place systems to ensure they are distributing their products only through registered and/or authorised advisers.

We monitor activities of non-QFE organisations who employ financial advisers which includes:

  • encouraging the public and other advisers to let us know about any providers who may be providing personalised advice services through unregistered or unauthorised employees
  • undertaking enquiries with product providers to understand their approach to ensuring they are not dealing with unregistered or unauthorised advisers.

Accordingly, we expect all product providers to have in place systems to ensure they are distributing their products only through registered and/or authorised advisers.