The Financial Markets Authority has cancelled the Financial Advice Provider (FAP) licence of Filcare Services Limited, one day after the release of its Financial Conduct Report.
Filcare Services Limited served around 1,800 clients, many from the Filipino migrant community.
The cancellation came after Filcare lost its distribution agreements with major insurers Fidelity Life and AIA New Zealand, prompting an FMA investigation that uncovered significant problems with how the company operated. These included a failure to:
- Keep adequate records of advice given
- Exercise care, diligence and skill when providing advice
- Ensure clients understood the advice they received
- Demonstrate that any recommendations made were suitable
FMA head of perimeter and response Helena Lewis said Filcare advisers also failed to provide adequate scope and nature disclosures to clients, leaving them “unable to make an informed decision about whether to seek, obtain, or act on the advice.”
The FMA also flagged Filcare’s handling of policy replacements. When advising clients to switch from existing insurance policies to new ones, advisers didn't properly explain the risks involved - like losing existing benefits or facing new exclusions due to changes in health. Clients weren't given adequate time to understand these implications before making decisions.
The cancellation serves as a warning to an industry that has gone through significant regulatory scrutiny, with the FMA noting in its latest Financial Conduct Report that “gaps remain” in preventing harm.
“The FMA will continue to take action where appropriate and ensure that all New Zealanders have access to a fair, transparent and efficient financial service,” Lewis said.
