FMA censures Wellington financial firm FoxPlan for offering and providing unpermitted investment advice

A Wellington-based financial services firm has been censured by the country’s markets watchdog after unauthorised advice was offered to some of its clients.

The Financial Markets Authority (FMA) said in a statement today it has formally censured FoxPlan Ltd after one of its nominated representatives provided services he was not permitted to give.

Other FoxPlan representatives also offered services to clients they were not allowed to, the FMA said.

But the FMA’s director of supervision, James Greig, said while the breaches were significant enough to warrant a public censure it did not meet the threshold for court action.

Following a monitoring review late last year, the FMA said it found one of FoxPlan’s Auckland-based nominated representatives had provided an investment planning service to some clients since mid-2018.

Under the Financial Advisers Act (FA Act) 2008, only authorised financial advisers (AFA) were permitted to provide this service, which involves designing a plan based on a person’s financial situation and identification of their investment goals.

Additionally, the FMA said it found four of FoxPlan’s representatives wrongly held out to clients they were an AFA or financial planner.

The FMA added in its statement it had reason to believe FoxPlan’s AFAs failed to comply with disclosure obligations. Specifically, it explained, the need to provide retail clients with their primary disclosure statement, an important document to ensure a client understands the service they are receiving.

FoxPlan has contacted affected customers who received an investment planning service from the nominated representative, including offering them a free review of their investment plan.

Greig said the case reiterates financial advice firms can be held liable for the actions of their advisers.

“A financial adviser providing a service they are not permitted to carry out is a considerable issue because it has the potential to lead to poor customer outcomes, such as the loss of funds from inadequate service,” he said.

“New Zealanders put their trust and their families’ financial wellbeing in the hands of their financial advisers so it’s critical we can be confident an adviser is appropriately qualified for the services they provide.”

At the request of the FMA, FoxPlan has undertaken several actions to address the underlying issues around the management of the firm’s advisers and added measures to prevent similar future misconduct.

The firm has also established an action plan which it is currently implementing to address the issues identified by the FMA.

“A public censure holds an entity to account while serving as an important reminder of firms’ obligations,” Greig said.

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