In April I whined about the Institute of Financial Advisers (IFA) refusing to name a financial planner - code-named 'C' - who had seriously breached the organisation's standards resulting in a 64-year old client losing most of her retirement money in the finance company abyss.
What
a difference a month makes. Just this week the IFA, which represents about 1,200 financial advisers, named and shamed two members for very similar breaches to the crimes of the anonymous 'C'.
But the IFA disciplinary committee deemed that Craig Lunn and Bruce Ryder stepped beyond 'C' in the seriousness of the offences. This is the first time the advisory industry body has publicised the names of members who have breached its code of ethics and professional conduct - it's a big move for IFA, which deserves a lot of credit for making such a bold decision.
In common with 'C', Lunn and Ryder were principally insurance advisers who the IFA said shouldn't have been giving investment advice. There are plenty of advisers who do both but once new regulations come into force - probably next year - many might decide to specialise in one or the other. Under the proposed regulations investment advisers will be subject to much more stringent compliance and competency requirements than those focusing solely on insurance.
And reading the IFA rulings in the cases of Lunn and Ryder you can see why this might be a good thing. Ryder, for example, plonked the entire $100,000 of the complainant's money - raised from the sale of a house - into Bridgecorp. And while he defended the investment, citing positive research reports on Bridgecorp from the likes of Rapid Ratings and interest.co.nz, it's an obvious breach of the eggs/basket rule.
Both Ryder and Lunn were fined by the IFA to cover costs of $30,000 and $37,000 respectively.
"We acknowledge that the costs are significant. That is the unfortunate nature of professional fees," the IFA ruling said.
David Chaplin
photo / Oamaru Mail
