“If you do get selected for responsive monitoring, we will be checking that you are complying with all the rules,” Burbery said.

“It's not an investigation or an audit. It's more of an opportunity for us to understand your business,” she said.

“We want to understand how FAPs are complying and ensuring good customer outcomes.”

Until now, much of the FMA's focus has been focused on “getting everybody licenced”, which meant achieving Level 5 of the New Zealand Certificate in Financial Services.

But now the focus will shift to ensuring compliance.

Such monitoring will provide the FMA with information on areas in which it needs to provide better or more guidance to the market, Burbery said.

“But if we do see non-compliance or evidence of consumer harm, we will act,” she said.

Monitoring may involve an on-site visit or electronic interview and the FMA will want to see the FAP's business records so it can both monitor compliance and the suitability of the advice and service the FAP is providing.

It will include formal interviews with staff, either virtually or on site, for one to three days.

The FMA will then provide a “preliminary debrief” and then a final review of the outcome, usually within four to six weeks, “Burbery said.

“It's an opportunity for you to show us what you do.”

Good record keeping practices “are essential”, as is ensuring financial advice is suited to the needs of each particular client. The FMA will also want to see that advisers have good relationships with their clients, she said.

Problems with record keeping “consistently comes up in our reviews as an issue” and it involves more than just maintaining client files, Burbery said.

Advisers need their records to show how they are meeting their obligations and should be created in a timely manner and kept for at least seven years.

Failure to provide the FMA with such records “in a timely manner” can constitute a breach.