Dissatisfied with your financial adviser? Have things gone wrong? You have a number of complaint options and you have rights to seek redress to issues with your financial adviser through various means.
Option 1 – Internal Complaints Process
Contact your adviser to express your dissatisfaction. This will give them – and you – an opportunity to consider the matter, and to respond. If your adviser is an Authorised Financial Adviser (AFA), they will be required to have an internal complaints process.
Contact the principal of the organisation or firm through which you received advice. If your adviser is an AFA then your firm should have higher level complaints processes in place. However sometimes resolution cannot be reached and there is a ‘deadlock’ in the internal complaint process.
Option 2- Dispute Resolution Scheme
If you have reached deadlock under the adviser’s internal complaints process you ought proceed to make the complaint to your adviser’s Disputes Resolution Scheme (DRS).
Under law, all advisers must belong to (be a member of) one of the four Schemes. This is a free service to consumers. You can find out which DRS your adviser belongs to by consulting the online database of advisers at fspr.govt.nz.
As the name implies a Disputes Resolution Scheme aims to find a way to resolve the issue without expensive or time-consuming litigation through the courts.
In the first stage, the DRS case manager will discuss the complaint with both parties to the dispute; in the second stage, the DRS case manager will try to reach an agreed resolution between the parties to the dispute; finally, if an agreed outcome is not able to be reached, a decision will be made based on the facts and any applicable law. This decision is binding on the adviser – but not on you, unless you agree to a binding settlement.
DR Schemes can investigate these types of complaints about their members: any breach of contract with a consumer, not following industry codes of practice (which may include not dealing fairly or responsibly with a consumer), conduct that is not fair or reasonable in the circumstances, breaking the law.
What DR Schemes can’t do is award compensation for more than $200,000 – although both parties to the dispute can agree to extend this limit.
As well, the Dispute Resolution Scheme it can’t investigate: a provider’s commercial judgement (for example, whether an investment is suitable for you) unless this breaches a code of practice that the provider was bound by, a provider’s interest rates or standard fees and charges, a product’s investment performance, events that took place before the establishment of the scheme or before a provider belonged to the scheme (with the exception of FSCL which can hear complaints from April 2010 even if a member didn’t belong to the scheme at that point) or more than 6 months prior to the complaint. complaints that could be better dealt with by another body (such as the Commerce Commission) or that’s already been made to another body (such as the courts) or that’s already been investigated by the scheme (although Banking Ombudsman scheme members can agree to a complaint being re-investigated and can also agree to waive the time limitations).
Option 3 – Make a complaint to the Regulator
Lodge a complaint to the Financial Markets Authority (fma.govt.nz). This is the government agency which regulates all financial advisers and can take action under relevant legislation, regulations and the Code of Professional Conduct for AFAs. It may be that the adviser has breached the terms of their authorisation, Code of Conduct obligations, disclosure obligations or consumer law such as the Fair Trading Act or Consumer Guarantees Act.
Option 4 – Make a complaint to Financial Advice New Zealand
Every Member of the Association is bound by the Association’s bylaws, Code of Ethics or Practice Standards. Members also make this Professional Promise to their clients:
Financial Advice New Zealand Professional Promise
As a member of Financial Advice New Zealand, I will always:
Place your interests above mine
Act with integrity
Be fair and reasonable
Restrict my advice to those areas where I am competent
Avoid or disclose any conflict of interest
Protect your confidentiality
Seek to continually improve as your adviser
If your complaint relates to a breach of the Association’s bylaws, Code of Ethics or Practice Standards please read your Adviser’s obligations here https://financialadvice.nz/constitution/
Please check if your adviser is Member of the Association https://financialadvice.nz/find-an-adviser/ We can only process a complaint against one of our Members.
Financial Advice New Zealand will investigate complaints regarding Member’s alleged breach of the Association’s Code of Ethics, Practice Standards, Bylaws and Rules of Conduct. If the matter is subject of any disciplinary, regulatory (FMA/DRS), criminal or civil investigation or proceedings the Association may temporarily suspend their investigation until conclusion of those proceedings and the impact of such findings from those proceedings may be considered.
The Association has powers to bring charges against a Member and call for a hearing of the Professional Conduct Committee (PPC) or the Board of Financial Advice New Zealand with one or more (but not limited to these) courses of action:
Require the Member to provide a written apology to the complainant
Censure the Member
Require the Member to complete professional development or other remedial training
Order the Member to take advice in relation to the management of the Member’s practice
Require the Member to provide reports on the Member’s practice
Require the Member to change their business practices and procedures
Make an order for costs* (these are regarding the hearing expenses incurred)
Refer the findings the Certification Committee who have to power to suspend or terminate membership and make other deliberations
Notify any relevant Government or statutory authority
Publish decisions of the PPC and Board in the newsletter or official publication of the Association, and on the Association’s publically assessable website, for a period of not less than six months
*The Association cannot order restitution to a client such as for any money lost or damages. In such cases you would need to take a complaint and seek remedial action under the adviser’s listed Disputes Resolution Scheme (this is a free service to the consumer) or bring a civil action against the adviser in the courts (however civil action and the engagement of legal advice is very expensive).