More homework from the FMA for those offering investment advice

The turnaround is tight: the regulator has published a set of nine questions and a feedback form and has asked for responses by 5 August.

The FMA’s default position is that advisers will generally need to access or undertake research to satisfy the “reasonable grounds” requirement in Code Standard 3 of the Code of Professional Conduct for Financial Advisers.

The standard requires those giving regulated financial advice to retail clients to ensure it is suitable in nature and scope. The adviser must also demonstrate the reasonable grounds upon which this advice has been given and, in most cases, this will involve expert research.

IPOs and listed equity securities have been chosen because, the FMA says, research of them can be difficult to find, especially on small-cap companies.