Company banned from calling Kiwis after complaints about enticing but misleading offers

The FMA found the content of the sales calls concerning. Photo / 123RF

The Financial Markets Authority has told a company to stop making outgoing sales calls to people after concerns about misleading marketing conduct.

The FMA said Kalkine New Zealand Limited described itself as an equities research firm.

Kalkine had a transitional financial advice provider licence from the FMA.

"Its sales representatives have made numerous outgoing sales calls to persons in New Zealand offering the purchase of stock analysis reports, which provide buy, sell or hold recommendations," the FMA said.

But several complaints emerged from the public about Kalkine's marketing practices.

The regulator analysed recordings of calls Kalkine sales representatives made to New Zealanders.

"The FMA found the content of those sales calls concerning," the authority added.

The regulator was especially concerned that some calls were likely to mislead prospective clients generally in relation to Kalkine's advice service.

The FMA also said the content of calls overstated the performance characteristics of Kalkine's service and of certain financial products referred to during sales calls.

And the content was likely to mislead clients in relation to Kalkine's primary place of operations.

The FMA said Kalkine had materially breached various fair dealing provisions in the Financial Markets Conduct Act.

The regulator also said Kalkine's marketing conduct fell short of relevant professional codes requiring people who provide regulated financial advice to act with integrity.

The new direction stipulates that Kalkine must not make outgoing sales calls to Kiwis until the FMA is satisfied with its compliance processes.

Kalkine must also give the FMA a report within 20 working days showing how the company will provide balanced information on risk and return to potential clients.

The report must clarify how future communications do not include representations likely to mislead or deceive consumers.

FMA Director of Supervision James Greig said the regulator found Kalkine assured some prospective clients they'd make money through stock investing with little or no regard to the inherent high risks.

"In other cases, Kalkine made unsubstantiated statements about the success of its recommendations and said that markets would perform strongly in the near future, despite returns from equities being uncertain and volatile by nature," Greig added.

"The overall impression created by Kalkine was that customers who chose to subscribe to its advice service could expect high and predictable returns, but no balancing comments were provided."

He said Kalkine's representations could entice people potentially unaware of the risks of investing into purchasing an advice subscription, and potentially financial products that were inappropriate.

The regulator said Kalkine had engaged constructively with the FMA throughout the inquiries.