{"id":4162,"date":"2020-05-30T14:41:06","date_gmt":"2020-05-30T14:41:06","guid":{"rendered":"https:\/\/www.futuresandoptions.gr\/en\/?p=4162"},"modified":"2020-05-30T14:41:07","modified_gmt":"2020-05-30T14:41:07","slug":"fma-warns-financial-adviser-for-advice-to-clients-about-covid-19","status":"publish","type":"post","link":"https:\/\/www.futuresandoptions.gr\/en\/fma-warns-financial-adviser-for-advice-to-clients-about-covid-19\/","title":{"rendered":"FMA warns financial adviser for advice to clients about COVID-19"},"content":{"rendered":"\n<p>The <a href=\"https:\/\/www.fma.govt.nz\/\">Financial Markets Authority<\/a> (FMA) has issued a formal warning to a financial adviser who made recommendations to clients that they urgently move their investments to \u2018low risk\u2019 funds in the wake of COVID-19. The adviser failed to clarify that the advice may not be suitable for all clients.<\/p>\n\n\n\n<p>The<a href=\"https:\/\/www.fma.govt.nz\/compliance\/role\/authorised-financial-advisers\/\"> Authorised Financial Adviser<\/a> (AFA) sent a bulk email in March 2020 to their clients, urgently recommending they move their savings in KiwiSaver plans and similar investment funds to <a href=\"https:\/\/www.futuresandoptions.gr\/en\/dramatic-rise-of-cybersecurity-risks-from-covid-19-prompts-action-plan\/\">\u2018low risk\u2019 funds, following uncertainty caused by COVID-19<\/a>. The FMA was alerted to the communication after receiving a complaint from one of the adviser\u2019s clients.<\/p>\n\n\n\n<p>FMA Head of Supervision James Greig said the advice was inappropriate and had the potential for significant harm.<\/p>\n\n\n\n<p>\u201cThe FMA has a low tolerance for poor conduct that poses risk to customers as a result of the COVID-19 crisis, especially because New Zealanders are looking for financial guidance at this time.<\/p>\n\n\n\n<p>\u201cIf the adviser\u2019s clients acted on the advice, they would have locked in any losses caused by market volatility. This change may not have been appropriate for all clients, depending on their investment plans, risk tolerance and specific circumstances,\u201d said Mr Greig.<\/p>\n\n\n\n<p>After reviewing the adviser\u2019s email to clients, the FMA considered that a reasonable adviser in similar circumstances should have:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Clearly communicated to clients that the email provides \u2018class\u2019 financial advice, has limitations and may not be appropriate for all clients. (\u2018Class\u2019 advice is general in nature and usually suitable for people in a group or \u2018class\u2019. It does not take into account personal circumstances)<\/li><li>Recommended that clients first discuss their personal circumstances and goals with an adviser, instead of asking them to urgently act on the advice.<\/li><\/ul>\n\n\n\n<p>After making inquiries, the FMA concluded the adviser\u2019s actions would likely be a breach of section 33 of the Financial Advisers Act, which says a financial adviser must act with care, diligence and skill.<\/p>\n\n\n\n<p>Mr Greig said a warning was the appropriate and proportionate regulatory response in the circumstances. The FMA decided not to name the adviser because they had cooperated with the regulator\u2019s inquiries, and they later clarified the advice with their clients. The FMA wanted to urgently deal with the issues at hand and send an important message to the industry about its expectations for providing suitable advice in extreme market conditions.<\/p>\n\n\n\n<p>The warning was issued under section 9 of the Financial Markets Authority Act 2011.<\/p>\n\n\n\n<p><strong>ENDS<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Financial Markets Authority (FMA) has issued a formal warning to a financial adviser who made recommendations to clients that they urgently move their investments to \u2018low risk\u2019 funds in the wake of COVID-19. The adviser failed to clarify that the advice may not be suitable for all clients.<\/p>\n","protected":false},"author":6,"featured_media":4163,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[14,1],"tags":[1038,1087],"class_list":["post-4162","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-news","category-uncategorized","tag-covid-19","tag-fma"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FMA warns financial adviser for advice to clients about COVID-19 - Futures and Options<\/title>\n<meta name=\"description\" content=\"The Financial Markets Authority (FMA) has issued a formal warning to a financial adviser who made recommendations to clients that they urgently mover FMA\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.futuresandoptions.gr\/en\/fma-warns-financial-adviser-for-advice-to-clients-about-covid-19\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FMA warns financial adviser for advice to clients about COVID-19 - 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