Tuesday 17th of May 2011

As I alerted in my last blog we've started doing spot checks on advisers to make sure they are now registered. One simple method has been to check the advertising or website of an adviser and if they are appear to be offering a personalised financial adviser service to the public we check the FSPR register to see if they (or the company they work for in the case of QFE advisers) are on it.  Not being registered when you should be is an easy way to end up on the wrong side of a new regulator eager for early results. During this process we've come across several advisers who have registered but not applied to be authorised.  And some of these registered-only advisers are still advertising financial planning, investment advice, KiwiSaver and other services.  There’s no information on their website saying they intend to withdraw from those services and nothing to indicate they’re planning to apply for AFA status. While it’s not illegal yet, with just six weeks to go* we think it’s misleading – your clients need to know the services you offer are about to change. Come 1 July any adviser advertising or marketing those services when they are not licensed to do so will be breaching the 'holding out' and misleading, deceptive and confusing conduct aspects of the law.  We will be actively looking for instances of this and taking action. If you haven’t already, you should now be reviewing all your marketing materials (website, brochures, business cards, advertising etc).  If you’re an RFA check any reference to AFA services is removed. If you’re an AFA make sure you’re describing your services accurately. For example:

• check the scope of the services you describe is aligned with what you are registered or licensed to do.  Opt-in AFAs should ensure it’s clear for their clients that they can only advise on category 2 products.
• if you have described yourself as a 'sharebroker' in the past, under the new law you can only do that if you or your employer are a member of a registered exchange.  And I would caution against substituting 'stockbroker' or other analogous terms which could lead to a holding out or misleading conduct complaint.
• if you're using the acronym AFA to mean Associate Financial Adviser, regardless of whether it's a designation granted by a professional body or not, I advise you to choose other language to describe what you do.
• AFAs should check you're not implying anywhere that FMA has endorsed or approved your business or advice (see Standard Condition number 7).

These are easy steps to take to protect yourself and your clients. *Eligible Canterbury advisers do have extended deadlines and have been excluded from our checks. Mel Hewitson