The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko – has cancelled the Financial Advice Provider licence of Christchurch-based Hope Group Limited (HGL).  

HGL has held a full financial advice provider licence and provided personal risk insurance advice (life and health insurance, income protection insurance, trauma and disability insurance) to retail clients.   

Louise Unger, FMA Executive Director, Response and Enforcement, said HGL’s cancellation followed the termination of its distribution agreement with the impacted insurer, and the FMA’s subsequent inquiry into its affairs.  

Following the notification from the impacted insurer, the FMA reviewed 14 insurance policy applications submitted by HGL’s sole director and financial adviser, Mr Junpu Wang, on behalf of 13 customers. The inquiries identified serious conduct issues resulting in material breaches of obligations. Specifically, the conduct included:  

• Submitting second policy applications for existing clients using incorrect or false customer information to conceal that the policies were duplicates
• Completing an authority to accept a direct debit form on behalf of a client without obtaining the client’s authentic signature
• Failing to obtain client consent for both first and second policies (with the same or similar cover) to remain active during a significant period, causing clients to pay two premiums.
• Misleading clients by recommending second policies to benefit from lower premiums under a promotional offer, despite clients being ineligible (e.g., already existing policyholders)
• Failing to ensure clients understood the advice provided. In some cases, clients were incorrectly advised that a new policy was needed because their existing policy would become more expensive after 24 months; in two cases, clients were told to take out a new policy to obtain a second luxury item – despite being ineligible for that benefit.

“Mr Wang deliberately misled impacted clients to take out second policies after the 24-month clawback period for the sole purpose to obtain commission payments from the insurer,” said Ms Unger.  

In doing so, HGL and Mr Wang obtained $37,374 in upfront commissions. In addition, clients paid two premiums for the same or similar cover while both policies remained active for up to 27 weeks, resulting in overpayments totalling $5,342.34.  

“HGL and Mr Wang’s actions represent a serious and deliberate departure from the standards expected of a licensed financial advice provider.   

“Mr Wang has not accepted his conduct, all allegations have been denied and attempts made to blame another financial adviser who was never engaged by HGL at the time the applications were submitted,” said Ms Unger.  

“The cancellation of HGL’s licence is critical to ensuring we protect consumers and the integrity of the market. A key function of the FMA is to ensure the quality of financial advice and financial advice services – which is clearly missing here.   

“A public notification helps the FMA to raise awareness about standards we expect, deter future contraventions by other market participants, and publicly express disapproval for contraventions under the FMC Act and the relevant regulations.”  

The insurer has contacted all impacted clients and made arrangements to ensure they are supported. In addition, HGL and Mr. Wang have been deregistered from the Financial Service Providers Register (FSPR), and the matter had been reported to the Police.  

Home Page | Business | Previous Story | Next Story

Copyright (c) Scoop Media