“We're not turning up to shut you down,” Hewes said, unless the adviser has been showing behaviour outside of their licence conditions.
The FMA would like to establish a relationship with the industry and to have advisers acting as “our ears and our eyes. If you're seeing conduct that isn't up to your standard, please let us know,” Hewes said.
“We can't be everywhere,” he said, adding that the FMA would like to be told about “anything you see that makes you feel uncomfortable, anything that could bring the industry into disrepute.”
The FMA's principal adviser, Crystal Burbery, told the conference that the FMA has been listening to the industry, particularly its concerns about “the intensity of monitoring.”
That has led to the regulator revising its information sheet that provides information on how it monitors financial advice providers.
“We don't know what you want from us unless you tell us,” Burbery said.
When the FMA decides to monitor a business, it isn't usually because it has received any complaints but is part of its process of understanding how the financial advice businesses are operating in New Zealand.
That monitoring could all be online or it could include an on-site visit to an advisory business or a combination of both, she said.
Most on-site visits won't be longer than a day but could be up to a week for larger businesses.
The FMA will usually telephone the business to work out the timing of such visits and outline how the process will work.
That will usually be followed by a formal letter outlining what was discussed.
After a site visit, the FMA will usually provide verbal feedback but may also send a formal letter outlining areas in which it wants to see improvements.
The key areas the FMA will be looking at are record-keeping, the suitability of any advice provided and that the adviser is providing clients with the legally prescribed information covering things such as fees, commissions and who that adviser's disputes resolution provider is.
“Record keeping protects you in the event of a dispute,” she said, adding that if an adviser relies on verbal communication only, then if a dispute arises years down the track, the adviser is not likely to remember that conversation.
The records don't have to be very “granular” but do need to show that the adviser understood the client's needs, provided advice that met the client's needs and that the client understood the advice, she said.
“It's always about your business policies and practices, not just client files, reflecting what you're doing day to day.”
