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.
Tags: David Chaplin, IFA
Excellent work. It has to be like this. i appreciate the effort by IFA.
I am sure also that the 80/20 rule is in place here, probably more like 95/5. The vast majority of investors burned by shonky operators such as these will probaly just shrug and put it down to “life lessons”. All investments carry an element of risk but these people, some elderly, do not have the knowledge, energy or even funds (oh, the irony) to pursue these cases. Especially against the faceless entities whose own greed (and perceived impunity) has fostered an environment where the hunter gatherers can dispense investment advice so lazily.
Firstly –David Chaplin — keep up the good work–we need people like you to keep acting as a watchdog on investments and poor financial advisers. There are a lot of people out there that have lost a lot of hard earned money recently through the NZ Finance company melt down, that are at a stage of their working lives that they will not be able to earn enough money to replace the lost capital before they retire. They will retire on a lot less, which also means less expenditure in our domestic economy. Some people will reveal their losses, but most are too ashamed to say anything.