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Financial Markets Authority sanctions KiwiSaver solicitor for "illegal activities" including cash in exchange for membership sign-ups and acting without a license

Posted in KiwiSaver Updated

An unregistered financial adviser caught selling KiwiSaver schemes in exchange for money, and without issuing the required paperwork, has been sanctioned by the Financial Markets Authority (FMA).

The authority said Patrick Diack, a salesman for several KiwiSaver schemes, had acted unlawfully in soliciting members of the public outside WINZ offices, offering them money in exchange for sign-ups and failing to provide them with investment statements explaining the nature of the schemes they'd join.

FMA Chief Executive Sean Hughes said KiwiSaver applications accepted by Diack in this manner would be rejected. He warned investors to be wary of these kind of tactics and to report them.

“High pressure or coercive sales techniques are inappropriate for KiwiSaver schemes and residential door-to-door selling of any security is prohibited by the Securities Act,” Hughes said in a press release.

Diack, in an email to interest.co.nz, admitted signing up more than 4,000 KiwiSavers in return for $10 a member.

He said WINZ reported him to the police more than 15 times and had "trespassed" him in Napier and Flaxmere. 

Without further elaboration, he described the situation as "totally ineffective.''

Hughes said action was taken against Diack after several complaints were received by the FMA. If convicted of the charges he is facing, Diack could be jailed for up to 12 months, fined as much as $100,000 or both.

Diack was operating most recently in the lower North Island.

Hughes said the action taken in respect of Diack’s activities should "serve as a warning to other KiwiSaver and financial product providers of their legal responsibility for those acting on their behalf and their moral obligation to protect their customers."

“The integrity of KiwiSaver as a financial product is crucial to New Zealanders having confidence to invest. ''

The Financial Service Providers (Registration and Dispute Resolution Act) -- which came into effect March 31 this year -- compels all  financial advisers to be registered on the Financial Service Providers Register.

The Act also specifies that anyone offering personalised financial advice on KiwiSaver be licensed (effective July 1) by the FMA as an Authorised Financial Adviser (AFA).

A list of AFAs is published on the FMA website www.fma.govt.nz.

 

 

*Updates with potential jail term and fines and notes KiwiSaver applications taken by Diack as being discarded.

 

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2 Comments

Bizarre.

Bizarre.

I would be interested to know

I would be interested to know which providers schemes he was selling.   You can't just do this on a whim and in splendid isolation - you need to set up an agency etc.