Wellington-based financial services company FoxPlan convicted of misconduct by the Financial Market Authority
The FMA found that four representatives of FoxPlan falsely claimed to be a licensed financial advisor or financial planner.
Wellington-based financial services provider FoxPlan has been convicted of a number of violations by the Financial Market Authority (FMA).
After a monitoring review at the end of 2020, the FMA found that one of the nominated representatives of FoxPlan in Auckland had provided some customers with an investment planning service since mid-2018.
Under the Financial Advisers Act, a designated agent is an unregistered individual who has been designated by a qualified financial firm to provide limited types of financial advice to their clients on a narrow range of financial products.
Only authorized financial advisors are permitted to provide an investment planning service that includes creating a plan based on an individual’s financial situation and determining the individual’s investment objectives.
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The FMA also found that four FoxPlan representatives falsely alleged to clients that they were an authorized financial advisor or financial planner.
The FMA also had reason to believe that FoxPlan’s authorized financial advisors had failed to meet their disclosure obligations – in particular the need to provide private clients with a primary disclosure statement, an important document to ensure that a client understood the service they received .
FMA supervisory director James Greig said the case reiterated that financial advisory firms could be held liable for the actions of their financial advisors.
“At the request of the FMA, FoxPlan has taken a number of measures to address the underlying issues surrounding the management of the company’s advisors and to take steps to prevent similar misconduct in the future,” said Greig.
FoxPlan has contacted affected clients who received investment planning service from the nominated agent, including a free review of their investment plan, he said.
A financial advisor who provides a service he was not allowed to perform has the potential to lead to poor client outcomes such as loss of funds, he said.
“New Zealanders place their trust and the financial well-being of their families in the hands of their financial advisors, so it is critical that we can be sure that an adviser is appropriately qualified for the services they provide.”
FoxPlan’s violations are serious enough to warrant public condemnation but not enough to cross the threshold for trial, he said