Go Financial Solutions is a Christchurch-based FAP advising on health, life and business insurance and mortgage lending. Its primary clientele is the Filipino community, including non-residents on working visas, according to the FMA.

During a monitoring review this year, the regulator found that Go Financial Solutions had inadequate record keeping, didn’t gather sufficient information about a client’s circumstances, couldn’t prove that its recommendations were suitable, didn’t ensure clients understood the advice they received and failed to exercise care, diligence and skill when providing financial advice.

In particular, the FMA saw instances where advisers failed to make reasonable enquiries or take into consideration clients’ medical circumstances when advising them about acquiring or replacing their life policy.

There were also occasions where a more detailed rationale was needed to support adviser recommendations to clients to sign up with a particular provider, or to switch providers. In the absence of this reasoning, the FMA says Go Financial Solutions failed to assess or review recommendations to a reasonable level.

No evidence

Go Financial Solutions was also criticised for having inadequate records around financial advice to retail clients. The FMA says dates in file notes for clients were ambiguous and inconsistent, making it hard to pinpoint when alleged client interactions took place.

In addition, Go Financial Solutions advisers didn’t take reasonable steps to ensure clients understood the implications of advice, said the FMA. As an example, it recommended a client opt for a level premium structure for their trauma and life cover. Then, purportedly at the client’s request, this was changed to a stepped premium structure.

Go Financial Solutions couldn’t show evidence that the client was informed of the consequences of changing the structure or that it explained the trade-offs between the two premium structures.

The FMA says the failures were a breach of the obligations required of a licenced FAP under the Financial Markets Conduct Act 2013.

Vulnerable characteristics

Peter Taylor, FMA director specialist supervision and response says, “Financial advisers are required to exercise care, diligence, and skill in their work, it is clear from the conduct we observed in our monitoring at Go Financial Solutions that this did not occur. These failures were serious and had the potential to cause harm, particularly for clients with vulnerable characteristics like English as a second language. Clients are entitled to trust their financial adviser and its conduct breached that trust and could erode the public’s confidence in financial advice providers.

“We expect FAPs to meet their obligations and to put good customer outcomes at the core of their business. Consistently delivering good outcomes requires sound systems, controls, record keeping, being disciplined about meeting compliance obligations, and good disclosure. It needs to be part of an organisation’s culture, including setting clear expectations and leading by example.”

Go Financial Solutions must submit an action plan to the FMA outlining the steps it will take to remedy the breaches and to ensure it doesn’t breach its licence obligations in the future.

The FMA says Go Financial Solutions has cooperated to date, and acknowledged its efforts to remedy the breaches. The FMA will monitor Go Financial Solutions’ compliance and completion of the action plan.