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FMA Data Request Underlines Issues of Responsibility for Advice

So you receive a nice letter from the FMA asking you for information on clients, policies, and advice that you have worked with since January 2012. This exposes a problem with the way many advisers work if you are an RFA or an AFA working for a larger business that employs advisers you suddenly realise that you will need the help of your employer to obtain all this information. That's fine.

Of course an employer would help you. If they won't, you write a nice note back to the FMA and the FMA will write to the employer and ask them to help you. But look further and you realise that although your employer may set policy, and even create approved product lists, supply databases, needs analysis tools, and so on, it is actually the individual RFA or AFA that is responsible for the advice under the current regime. That's why the FMA wrote to you.

Much of the debate during the FAA review seemed to suggest that individual rather than company responsibility was best. It has many great features, I agree, but you can also imagine situations it works the other way. You can see how an RFA, faithfully following the instructions of their employer, may end up failing to meet obligations for which they are individually liable.


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