MR No. 2021 – 62
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has cancelled the transitional financial advice provider (FAP) licence of Wisdom House Investment Partners Limited, after its sole financial adviser engaged in serious misconduct at his previous employer.
Wisdom House is solely operated by Mr Yuen Pok (Paul) Loo. He established the business after his contract was terminated by Wellington-based financial services firm FoxPlan Ltd, which was censured by the FMA in July 2021 because, among other breaches, one of its nominated representatives provided services he was not permitted to give. That nominated representative was Mr Loo.
Mr Loo’s misconduct at FoxPlan also included telling his clients that he was an authorised financial adviser when he was not, and invoicing clients for advice using altered FoxPlan invoices so that FoxPlan’s clients would pay him directly – resulting in him misappropriating $36,029.98 from FoxPlan between 4 July 2018 and 4 November 2020. Additionally, Mr Loo wrote investment plans for clients that had not been approved or signed off by the firm.
Mr Loo has subsequently returned the misappropriated funds to FoxPlan and the FMA is not aware of any clients suffering a financial loss because of his misconduct.
Mr Loo’s misconduct was discovered during an FMA monitoring review of FoxPlan. FoxPlan considered that Mr Loo had breached his agency agreement and the firm’s internal policies, which led to his contract being cancelled immediately.
As a result of Mr Loo’s misconduct and the FMA’s enquiries, the FMA was satisfied that Wisdom House’s transitional financial advice provider licence should be cancelled.
Mr Loo did not dispute the facts and acknowledged his misconduct and showed remorse. However, the FMA determined that Mr Loo did not adequately address the regulator’s concerns and is not a fit and proper person to hold the position of director or senior manager due to the serious nature of his misconduct. In addition, the FMA concluded that Wisdom House is likely to contravene its licensee obligations in the future because Mr Loo is the sole director and adviser.
This is the first time the FMA has cancelled a financial advice provider licence.
James Greig, FMA Director of Supervision, said: “Trust in the financial advice sector is imperative and any misconduct that undermines that must be held to account. A licence cancellation is a strong regulatory response and we decided it was necessary in this case to send a strong message of deterrence.”
Wisdom House’s licence was cancelled on 10 December 2021. Mr Loo is informing his clients and affiliated product providers of the licence cancellation.
About transitional FAP licences
From the start of the new financial advice regime on 15 March 2021, anyone who gives regulated financial advice to retail clients must either hold, or operate under, a FAP licence. There are two phases to the licensing process: transitional and full.
Transitional licences took effect from 15 March 2021 and are valid for up to two years.
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