Cookie-cutter ABS’s uncovered by first FMA monitoring
A lack of personalised Adviser Business Statements (ABS) was the most common issue the Financial Markets Authority (FMA) uncovered from its first round of monitoring visits.
Thursday, November 10th 2011, 5:00AM
by Benn Bathgate
"Make sure that you don't adopt a template but make sure it speaks for you and the service you're providing, so the clients have a clear understanding of what you're going to do," said Sue Brown, FMA head of primary regulatory operations.
She said that while some advisers - with caution in mind - hadn't strayed far enough from a provided template it was necessary for them to be tailored to the individual adviser.
"A person who's given a template doesn't want to stray from it too far I suppose," she said.
"What I'd say to the industry associations and others who are providing templates is that yes, it's a very useful starting point, but encourage the people you're providing it to to use it only as a starting point rather than as an end point."
Brown said another issue the monitoring uncovered was documentation that didn't clearly support the advice given.
"We found in some cases - and of course there was a whole spectrum of cases - we looked at the documentation and we really couldn't see the process they'd used clearly enough to enable us to be satisfied that the advice was suitable."
Brown said that those advisers had been asked to take steps to address the issues highlighted by the FMA and that they would be engaging with them in the future "to make sure they are producing suitable outcomes for their clients."
However, overall Brown said she was pleased with the standard of regulatory compliance and professionalism among the AFAs they visited.
"We expected to see a bell curve of performance with the solid citizens in the middle who are doing their best to comply, at the fringes there will be people who either are never going to comply or people who make so many mistakes really they shouldn't be in the market - we didn't see either of the two ends I'm glad to say."
Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz
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