The Financial Markets Authority (FMA) has censured Christchurch-based property and financial services firm Opes Group Holding Company Ltd (Opes) for failing to comply with a number of obligations under its financial advice provider licence.
"We made the decision to censure Opes because there were shortcomings in its record keeping, how it ensures client understanding of its advice, its management of conflicts of interest and oversight of its advisers," FMA Executive Director for Response and Enforcement Louise Unger said.
"The firm [Opes] is vertically integrated - combining property sales, investment planning, mortgage advice and accounting and property management," Unger said.
"While this offers integrated services, the business model creates a risk of conflict of interest between the financial advice provider and the client, making adequate policies and procedures in this area and the implementation of them, critical to appropriately managing the risk," she said.
"The FMA found that Opes did not have adequate policies or processes in place and could not be confident that all conflicts had been identified, disclosed and managed," Unger said.
The FMA said Opes had acknowledged its regulatory compliance, policies, procedures and staff adherence to policies had not kept pace with its rapid growth and were not fit for purpose for the business.
"It [Opes] has acknowledged the FMA's view that there has been a gap between Opes' compliance with its financial advice provider obligations and where it actually needs to be," The FMA said.
"Opes has cooperated fully with the FMA, has already taken significant steps to address concerns raised by the FMA and has provided a voluntary remediation plan for further improvements it intends to make," the FMA said.
'The FMA did not identify any actual client harm'
Opes Director Ed McKnight said the company had invested in strengthening its processes since the FMA review.
"While the FMA did not identify any actual client harm from its review, we hold ourselves to the highest standard and agree with its assessment that our regulatory compliance hasn't kept up with our rapid growth," McKnight said.
"We've taken further steps to improve our record keeping and other processes, including the way we manage conflicts of interest and risk disclosures," he said.
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