1. Compliance
  2. Authorised Financial Advisers
  3. Monitoring and surveillance
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Authorised Financial Advisers

Page last updated: 21 Feb 2019

Monitoring & surveillance

We select AFAs for monitoring reviews in one or more of the following ways:

  • random selection
  • risk-based - including the nature, scale and extent of the AFA's business
  • targeted - based on information received
  • part of a theme, eg researching a particular service, or exploration of a potential industry problem.

Monitoring activities include a mix of desk-based research (investigating complaints, checking websites, and reviewing documents, eg. Adviser Business Statements, professional development plans), phone discussions and office visits. We may also use mystery shopping.

FMA's current monitoring and surveillance activities for AFAs include:

  • following up complaints or queries received about AFAs
  • proactively checking through web-based research that those who've applied but are not yet AFAs are not offering AFA services
  • review of AFA Adviser Business Statements
  • office visits to AFAs.

Our expectations in these areas are covered in the AFA ABS Guide and in the AFA monitoring feedback and tips outlined below. FMA's AFA monitoring reports on how AFAs are complying with their legal obligations can be found here.

What happens if we request to see your ABS

If you receive a request to submit your ABS, you will be expected to submit this promptly.

You will receive a fact sheet explaining how the review will work and the likely outcomes. These may include:

  • a letter advising that no further review is required at this stage
  • feedback about how to improve your ABS; we may or may not ask you to submit it to us again once changes have been made
  • a request for a formal interview by phone
  • a visit (see below).

What if we visit your business

In most cases, we will contact you to find a convenient time to visit. The monitoring review is about your compliance - so other members of your team cannot substitute.

You will receive a fact sheet explaining how the visit will work and what we will need you to prepare. You will usually be asked to supply your ABS in advance of the visit.

During a visit, we will review your compliance with your obligations, and check you are operating in accordance with your ABS. We will also consider whether the advice or service provided was suitable.

In accordance with Standard Condition 4, you need to have available all business records pertaining to your financial adviser business so that we can complete this review. This may include your client files, your systems and procedures, your disclosure statements and your competence records.

To facilitate this you should explain to clients they are subject to regulation including monitoring by FMA, and obtain their clients' authorisation to the release of their personal information to us.

Where AFAs have not yet obtained client authorisation, and cannot meet their obligations under Standard Condition 4, FMA may decide to use its powers under section 25 of the Financial Markets Authority Act 2011 to require an adviser to supply FMA with information, documents or evidence. In this case, section 7 of the Privacy Act applies so that clients' consent to the release of their personal information is not required.

Any client information held by FMA will be held securely.

Inspection of records is a standard function of any regulatory body and gives the public more certainty professional standards are being upheld.

Once the visit is over, we will let you know the outcome of the review and whether any further information or work is required.

Preparing for an FMA visit

AFAs should consider the following:

  • show us you understand how to meet your obligations under the Acts and the Code, eg. clear marketing materials that wouldn't mislead a customer; simple disclosure statements that follow the prescribed format (primary disclosure) and the intent of the regulations (secondary disclosure); an ABS that is specific about what you do and demonstrates how you address possible risks for your clients
  • help us to see how you put your client first
  • keep up to date with any feedback we've issued
  • take a constructive approach
  • be proactive, eg volunteer relevant additional information in answers.

See 'what we look for in our monitoring' page for more details

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