Welcome to the first FMA Financial Advisers Update

Romil Ghelani, FMA Head of Financial Advice

Kia ora koutou
Welcome to the first edition of the FMA Financial Advisers Update, where we will share information specifically for financial advice providers. If this edition was forwarded on to you from someone else, you can subscribe on our website here.

FANZ Conference
It was great to see many of you at the FANZ Conference in Christchurch last week. I really enjoyed presenting one of the masterclasses alongside Michael Hewes, the FMA's Director, Deposit Taking, Insurance and Advice and experienced industry practitioners Andrew Logan from Lifetime and Michael Gallagher from Financial Advice Hawkes Bay.
It was also great catching up with advisers to hear how things are going with compliance.
You may have seen our Chief Executive Samantha Barrass at the conference where she announced our review into access to advice.
The purpose of the review is to help the FMA understand the opportunities and challenges around improving accessibility of financial advice for consumers.
We’re keen to gather feedback on our proposed terms of reference. See below for more information.

Regulatory returns data
We have published the first data snapshot of the financial advice sector since the new financial advice regime came into effect in March 2023. 
I’m really pleased to say that the sector is healthy. The total number of Financial Advisers and Nominated Representatives remained strong through the regulatory changes.  We have more below detailing the data and where you can find more information.

I hope you enjoy the newsletter and find it useful. Our goal is to make sure we remain connected with you, and that you get to hear directly from us on topics that are relevant and helpful.
If you have any questions or feedback, please don’t hesitate to get in touch.

- Romil Ghelani 
Head of Financial Advice

Regulatory returns data signals a healthy sector 

This is the first time the FMA has collected comprehensive data on the financial advice sector since the new financial advice regime came into effect in March 2023.  

This data is derived from the 2024 Financial Advice Provider regulatory returns and provides valuable insights into what types of products are being advised on and how customers are receiving that advice. The FMA will use this data to help shape the way we supervise and engage with the sector.

This snapshot has been compiled using data from 1 July 2023 - 30 June 2024. There were 8,472 financial advisers as at 30 June 2024, compared to 9,300 in 2021.

Key statistics (as of 30 June 2024)  

- 1410 licensed financial advice providers (FAPs) in NZ. 
- 8472 financial advisers compared to 9300 in 2021.  
- Life and health insurance are the most common financial products advice is provided on. 
- 36 FAPs are providing digital advice and 86,500 retail clients received digital advice that resulted in them acquiring a product. 
- 97% of complaints received were settled within three months. 

FAPs will be able to submit their return through the FMA’s secure online portal. On the 1st of July 2025, the FMA will email licensed FAPs with a link to this portal - this email will be sent to the contact email address recorded in our information systems.

Additional information can be found on our FAP regulatory returns page.

Find out more in our latest 5 mins with the FMA podcast: 

Review of access to financial advice for New Zealand

We know there are many positive impacts for consumers who receive good quality financial advice. Therefore, ensuring consumers can access quality financial advice when they need it is crucial.

To enhance our understanding of the availability of financial advice in New Zealand, we are planning a review to help identify challenges and opportunities related to access to financial advice. We are proposing to focus this review on four key themes:

• Consumer preferences and demographics 
• Industry business models 
• Digital advice and innovation 
• Ease of provision of financial advice  

What we learn will inform our areas of regulatory focus. We will also share relevant insights that may highlight opportunities for individual FAPs or the sector as a whole.

Before we start our review, we want to be sure we are focusing on areas that are relevant for industry and consumers. We have published a proposed terms of reference for the review.

We’re seeking feedback on the focus areas, as well as any other topics or sources of information that may provide insight into the availability of financial advice.

Read the proposed terms of reference and have your say by 30 May 2025.

Collaboration and regulatory changes focus of FANZ Conference speech

FMA Chief Executive Samantha Barrass

At last week's Financial Advice New Zealand Conference, FMA Chief Executive Samantha Barrass emphasised the importance of collaboration between regulators and the financial advice sector. This partnership is crucial to enhancing the accessibility and quality of financial advice for all New Zealanders. 

She said the financial sector has experienced significant regulatory changes, including the introduction of conduct legislation and the upcoming transfer of Credit Contracts and Consumer Finance Act (CCCFA) responsibilities to the FMA. These changes are designed to create a more robust and fair financial environment. 

Understanding business models 
To further improve the sector, the FMA plans to analyse business and remuneration models within the advice sector. This analysis aims to identify drivers of poor conduct and inform regulatory focus, potentially reducing burdens on lower-risk providers. 

Outcomes-focused regulation 
Samantha also talked about outcomes-focused regulation, which involves prioritising efforts based on the greatest risks and opportunities. This approach supports firms in achieving better consumer outcomes by focusing on what truly matters. 

Commerce Commission’s personal banking services competition report
The FMA is also considering recommendations from a market study into banking competition, particularly regarding mortgage advisers. These recommendations aim to enhance consumer outcomes in the mortgage advice market. 

CoFI and the fair conduct principle 
The Conduct of Financial Institutions (CoFI) regime emphasises the principle of fair conduct in financial services. This ensures that consumers receive appropriate products and services and eliminates volume and value-based incentives that could disadvantage them. 

CoFI and new sales incentive regulations

New regulations relating to sales incentives, which also apply to intermediaries, are now in force after the new Conduct of Financial Institutions (CoFI) regime began on March 31.

The CoFI Act amends the Financial Markets Conduct Act 2013 to ensure financial institutions treat consumers fairly. The regime is designed to protect consumers by putting them at the forefront of institutions’ decisions and actions.

The FMA has, for many years, highlighted how volume- and value-based incentives can be detrimental to fair consumer outcomes. This was covered in the Conduct and Culture reviews undertaken in 2018 and 2019 and the 2018 Bank Incentives Structures review.

Financial institutions and intermediaries now need to comply with these new sales incentive regulations, introduced to address inherent conflicts between the interests of salespeople or intermediaries and consumers.

Certain incentives are now prohibited – essentially financial institutions and intermediaries cannot offer sales incentives based on volume or value targets to customer-facing employees and their immediate managers. This also applies to their agents and intermediaries.  

Financial institutions must now completely remove any prohibited incentives, including those offered or given to intermediaries and agents involved in the provision of their services and products.  Intermediaries – including financial advice providers – also must not offer or give prohibited incentives.

More about sales incentives here

Some financial advice providers may have already been told of changes to their incentive structures by the financial institutions they deal with. If a financial advice provider has implemented its own incentive structures, these also need to comply with the new CoFI regulations.

Got a question? We're here to help! 

We often feature questions we receive during our interactions or sent to us directly.

Who can design an investment plan and what may it include? 

Designing an investment plan is a form of giving financial advice that takes the client’s overall financial situation into account and addresses the client’s investment goals.

We've published an FAQ on our website answering some common questions about who can design an investment plan and what it may include.

Have a question about regulations or what the FMA does? Now's your chance to ask! Simply email your question to questions@fma.govt.nz with "FMA Financial Advisers Update" in the subject line.

FMA engagement, monitoring and enforcement activity – highlights

We published our inaugural FAP insights report last year to share findings from the FMA’s supervision activities and monitoring of Class 1 and 2 licensed financial advice providers.

The FMA continues to conduct monitoring reviews (including onsite visits) of Financial Advice Providers, across Class 1, 2 and 3 licence holders. We encourage FAPs to review our information sheet on what to expect from a monitoring visit.

Below are highlights from our ‘behind the scenes’ work across licensing, engagement, monitoring, and enforcement activity for financial advice since July 1 2024:

188 FAP licences approved

This has been a combination of new entrants into the industry, providers looking to introduce a financial advice service, and firms which were previously an Authorised Body under another FAP deciding to hold their own FAP licence.

Over 100 market engagements and meetings in the sector

This has included speeches at national conferences and meetings with training providers and compliance support providers. Other meetings include those with industry associations, including FANZ, IBANZ, SIFA and FAMNZ.

There have also been meetings with several FAPs across life and health, wealth management, residential lending and general insurance. We have also met with aggregators, product providers and dispute resolution service providers.

16 monitoring engagements on FAPs

The entities we monitored included Class 1 and 2 firms. For three FAPs, we visited a bank, fund manager, and personal lending provider. We also continued engaging with FAPs (including aggregators) from previous years' monitoring action plans. 

The types of financial advice covered during these engagements include personal and fire & general insurance, residential lending, and investments (including overseas pension transfers).

Key observations and feedback provided to these FAPs relate to core obligations, including: 

•     Suitability of advice (Code Standard 3)
•     Oversight of advice
•     Disclosure 
•     Record Keeping

As a result of the monitoring reviews conducted during the period, we have issued 13 feedback letters, with a number of engagements still ongoing. We are working with these FAPs to address any remedial steps required. 

For monitoring reviews, where we identify harm (or potential harm) and material contraventions, we refer the matter to our Response & Enforcement function to determine whether a more formal regulatory response may be appropriate.
 

116 misconduct reports lodged and assessed regarding a FAP or Financial Adviser

Notable areas include:  

•       Allegations of unethical behaviour/unprofessional conduct.
•       Excessive or poor advice on investment property lending.
•       Allegations of insurance churn.
•       Handling of clawback, including lack of disclosure.
•       Advertising and promotional activity risking being
        misleading.  
•       Inadequate handling of complaints.
•       Giving advice without holding proper qualifications.

It is important to note that not all notifications we receive lead to an investigation. As part of our process, our response to these matters may include reviewing the entity’s risk profile in our systems, desk-based reviews, onsite inspection, making further enquiries, and informal and formal action (if deemed appropriate).

Investigations and formal actions against Financial Advice Providers and/or Advisers

•  David McEwen (more below)
•  Integrity Advisers Insurance - the FMA cancelled Integrity's licence for   engaging in serious misconduct. 
   More here

•  The FMA censured Auckland-based firm deVere for failing to comply   with obligations under its licence. 
   More here

•  One FAP was required to submit a formal action plan.

FMA files criminal charges against David McEwen

Criminal charges have been filed against former financial adviser David McEwen, for failing to comply with an FMA stop order, due to concerns he is still contacting potential investors.   

The FMA issued Mr McEwen and a number of entities associated with him a stop order in December 2023 that prohibited him from: 

• Making offers, issues, sales or other disposals of McEwen and Associates’ financial products. 
• Distributing any restricted communication that relates to an offer of McEwen and Associates’ financial products. 
• Accepting further contributions, investments, or deposits in respect of McEwen and Associates’ Financial Products. 

The FMA alleges that Mr McEwen failed to comply with the stop order by continuing to make offers and accept contributions for financial products.  

"We are concerned that Mr McEwen is continuing to flout the prohibitions of the stop order and may be causing potential harm to investors in doing so. I strongly recommend that investors contacted by Mr McEwen or entities associated with him, in relation to the offer of a financial product, report it to the FMA,” said FMA Head of Enforcement Margot Gatland.

Former financial adviser sentenced to three years imprisonment for fraud

Former financial adviser Harish Puri has been sentenced to three years imprisonment for committing insurance fraud.

Mr Puri was an Auckland-based adviser who provided advice on health, life, trauma, disability, and income protection insurance for his clients.

Between 2021 and 2023, Mr Huri submitted 41 fraudulent policy applications through two online portals of the insurers he worked with by altering genuine clients’ details to make it look like new clients or using details from other members of the public. In total, he secured $775,000 in upfront commissions.

The FMA and New Zealand Police received a complaint from the insurers in March 2023. After opening an investigation, the FMA passed its information over to Police. Mr Puri was charged with two counts of obtaining by deception in March 2024. He pleaded guilty and was sentenced in February 2025.

FMA Head of Financial Advice, Romil Ghelani, said: “Mr Puri’s actions were nothing short of unacceptable. His conduct discredits the good work we see across financial advice sector. When we see this type of behaviour, the FMA will respond swiftly and decisively to hold individuals to account and promote the integrity of the financial advice sector. We would like to thank the insurers for their notification of the conduct and co-operation, and to New Zealand Police for their work advancing this investigation and bringing Mr Puri to justice.”

Evolving world of investment scams

The FMA’s Regulatory Services team recently ran a webinar sharing insights into the evolving world of investment scams in New Zealand. Part of the presentation focused on the important role that advisers play in protecting investors and helping stop scams.  

Advisers can play their part by having conversations with clients about suspicious investments and reporting any investment scams to the FMA. Working closely with industry gives the FMA access to valuable information not normally received through public reports. Scams are changing rapidly, so speed is needed to respond effectively.  

“Getting an effective warning out before an investment scam hits New Zealand is always the aim – and we need information to do that,” said Samantha McGuire, FMA’s Manager, Regulatory Services. “We have seen many cases when losses are prevented because a victim has discussed the investment with their financial adviser who has saved them from putting money into a scam offer.”  

The FMA highly values the information we receive from advisers about scams they might come across in the course of their business. This can help us put out a warning to save others from falling victim.  

Useful information to share with the FMA includes:   

• - Any investment scams or near misses​.  
  - Businesses providing financial services without the proper licence or registration​.  
  - If you have overseas parent companies, information about the scams they are seeing​.  
  
  Remember, you don’t need to share your clients’ personal details with us.​  Any information is useful - you might be holding the missing piece of the puzzle that will enable us to take action.  

Tools and resources

• Record keeping - https://www.fma.govt.nz/assets/Information-sheets/Record-keeping-self-assessment-tool.pdf
• Outsourcing arrangements - https://www.fma.govt.nz/assets/Information-sheets/Key-outsourcing-arrangements-self-assessment-tool.pdf
• BCP & cyber-resilience - https://www.fma.govt.nz/assets/Information-sheets/Developing-cyber-resilience-for-financial-advice-providers.pdf |  https://www.fma.govt.nz/assets/Information-sheets/Self-assessment-tool-cyber-security-and-BCP.pdf
• Reporting cyber incidents - https://www.fma.govt.nz/assets/Guidance/Guidance-Notification-of-incidents-relating-to-the-operational-resilience-of-technology-systems.pdf
• Conflicts of interest - https://www.fma.govt.nz/assets/Information-sheets/Customer-care-managing-conflicts-of-interest-self-assessment-tool.pdf
• Vulnerable customers - https://www.fma.govt.nz/assets/Reports/CustomerVulnerability-ourexpectationsforproviders.pdf
• FAP monitoring - https://www.fma.govt.nz/assets/Information-sheets/Monitoring-of-licensed-Financial-Advice-Providers-information-sheet.pdf

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