The company is required to submit an action plan to FMA
The Financial Markets Authority (FMA) has censured Go Financial Solutions for non-compliance with various obligations under its financial advice provider (FAP) licence.
The Christchurch-based FAP, specialising in health, life, and business insurance along with mortgage lending, primarily serves the Filipino community, including non-residents on working visas.
Regulatory breaches
Following a monitoring review earlier this year, FMA identified several shortcomings at Go Financial Solutions. This includes the following:
- inadequate record-keeping in relation to advice given to clients
- insufficient client-information gathering to ensure suitability of recommendations
- failure to ensure client understanding of financial advice
- a lack of care, diligence, and skill in providing financial advice
In particular, FMA observed instances where advisers at Go Financial Solutions failed to make reasonable inquiries about clients’ medical circumstances when advising on policies, lacked a detailed rationale for certain recommendations, and had inadequate records for financial advice provided to retail clients.
FMA also found that advisers failed to ensure clients understood the implications of financial advice, citing an example where a recommended change in premium structure lacked proper client communication.
These failures constituted a violation of the obligations that a licenced FAP must adhere to under the Financial Markets Conduct Act 2013.
FMA response and expectations
Peter Taylor (pictured above), director of specialist supervision and response at FMA, emphasised the seriousness of the breaches, highlighting potential harm to clients, especially those with English as a second language.
“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,” Taylor said in a media release.
“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.”
Taylor stressed the expectation for FAPs to prioritise good customer outcomes, emphasising the importance of sound systems, controls, compliance, and good disclosure as integral components of organizational culture.
Remediation steps and monitoring
Go Financial Solutions is now required to submit an action plan to FMA, outlining steps to rectify the breaches and ensure future compliance.
FMA, acknowledging the company’s cooperation and remedial efforts, will closely monitor Go Financial Solutions’ adherence to the action plan.
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