FMA Censures deVere New Zealand for License Breaches

Highlights:

• Inadequate Record-Keeping: DeVere New Zealand failed to maintain proper records of client advice, impacting the transparency and accountability of its financial advice services.
• Unsuitable Recommendations: The FMA found that deVere advisers did not ensure that their investment and pension transfer recommendations were suitable for clients' risk profiles and financial understanding.
• Regulatory Oversight: The FMA has mandated deVere to submit an action plan to address these breaches and will closely monitor its compliance to prevent future violations.

The Financial Markets Authority (FMA) has censured Auckland-based deVere New Zealand for failing to meet its Financial Advice Provider (FAP) license obligations. DeVere offers advice on insurance, investments, retirement planning, KiwiSaver, and UK pension transfers. The censure stems from issues related to advice on UK pension transfers.

Key Findings

Following a complaint, the FMA reviewed deVere's client files and found several deficiencies:

• Inadequate record-keeping of client advice.
• Failure to demonstrate the suitability of recommendations.
• Lack of client understanding regarding financial advice and its limitations.
• Inappropriate limitations on the scope of advice without clear communication.
• Insufficient care, diligence, and skill in providing advice.

Client Impact

DeVere advisers did not adequately consider clients' investment experience, risk profiles, or the complexity and risks of recommended products. Some recommendations involved higher-risk investments than clients' tolerance allowed.

Regulatory Response

Peter Taylor, FMA Director of Specialist Supervision and Response, emphasized that FAPs must adhere to ethical standards and client care. He highlighted the importance of thorough analysis when advising on pension transfers due to their complexity and potential long-term impact on clients' retirement.

DeVere's Actions

DeVere has acknowledged its shortcomings and has taken steps to improve compliance and record-keeping practices. The FMA requires deVere to submit an action plan detailing remedial steps and timelines. The FMA will monitor deVere's progress to ensure compliance and prevent future breaches.

Conclusion

This censure serves as a reminder for all FAPs to uphold high standards of ethical behavior, conduct, and client care to avoid significant customer harm and ensure the suitability of financial advice.

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