The Financial Markets Authority (FMA) moved into overdrive in July with four significant regulatory scalps along with heads-up warnings on general insurance and cyber-resilience.
In busy end-of-month schedule, the regulator last week claimed a win in the Auckland High Court against life insurer AIA (fined $700,000) while issuing what could be the final public-shaming notice to a financial advisory firm (Foxplan) for breaching the now-replaced advice legislation.
July began for the FMA with the first cancellation of a managed investment scheme (MIS) licence – mortgage scheme Fund Managers Otago – while along the way the regulator pinged crowdfunding platform Equitise for missing reporting deadlines, issuing a $7,500 fine.
The monthly regulatory action also included a damning report citing the general insurance sector as ill-prepared for the yet-to-be-finalised Financial Markets (Conduct of Institutions) Amendment Bill and more ‘guidance’ for the advice sector on “cyber-resilience”.
As well, in July the FMA – along with the Reserve Bank of NZ – launched consultation on regulations to support the new Financial Market Infrastructure Act, designed to shore-up the ‘plumbing’ of country’s financial system.
In ongoing moves, too, the FMA is also pushing licensed investment managers hard on the ‘value for money’ mantra while turning its attention to the wholesale fund market where it currently has limited regulatory powers.
But the public censure of Wellington-headquartered advice firm Foxplan sends a clear signal that the regulator has ramped up oversight of the sector.
The case against FoxPlan – a holder of the ‘Trusted Adviser’ mark from industry group Financial Advice New Zealand – was based on breaches of the now-revoked 2008 law governing the sector.
According to the FMA, several FoxPlan advisers breached conditions under the 2008 legislation by providing services “they were not permitted to give”.
For instance, one FoxPlan ‘nominated representative’ – a term used under the 2008 law to describe individuals acting under the auspices of a qualifying financial entity (QFE) – offered services that were limited to authorised financial advisers (AFAs).
The AFA and QFE terminology has been scrapped under the now in-force Financial Services Legislation Amendment Act while ‘nominated representative’ has a broader application.
Despite bringing the FoxPlan breach charges under the previous regulatory regime, James Greig, FMA director supervision, said in a release: “This case reiterates that financial advice firms can be held liable for the actions of their financial advisers.”
As reported late in July, the FMA has launched a regulatory information sweep under Section 25 powers contained in the Financial Markets Conduct Act to uncover potential cases of unlicensed advisory activity in the post FSLAA world.
Among five requirements, the Section 25 notice calls for targeted firms (understood to be mainly life insurers) to provide information on “actions you have taken to satisfy yourselves” that no unlicensed individuals have used their products.
Furthermore, the FMA is asking for: “Details of the actions you have taken to satisfy yourselves as to who will be responsible for the ongoing engagement and financial advice for any clients attached to advisers that neither holds, nor is engaged by a person who holds, a full or transitional FAP [financial advice provider] Licence.”
Later this week it is understood the regulator will also release a report on the booming NZ investment platform sector, the subject of the second annual FMA ‘great debate’ set down for a 6pm start this Wednesday (August 4) at Auckland’s Q Theatre – or live-streamed for the out-of-towners.