Christchurch-based financial service provider Integrity Advisers Insurance has had its Financial Advice Provider (FAP) licence cancelled after pressuring clients to retain their policies and threatening to report clients to Immigration NZ (INZ) over failing to pay fees.

The Financial Markets Authority (FMA) said Integrity, which held a full FAP licence, had engaged in serious misconduct.

Integrity provided financial advice to about 500 retail customers, many from the Filipino community.

Following an investigation, the FMA found Integrity breached its market services licensee obligations by failing to:

• - give priority to clients’ interests;
• - comply with the Code of Professional Conduct for Financial Advice Services;
• - treat customers fairly;
• - act with integrity.

The breaches relate to Integrity’s treatment of clients wanting to cancel their respective insurance policies between September 2022 and June 2023.

The FMA said if affected clients cancelled their insurance policies, Integrity had to surrender the commission (also known as a clawback charge) it received to the relevant insurance provider.

While Integrity did disclose the potential recovery of fees to clients at the start of the engagement, the FMA found Integrity unfairly pressured affected clients to retain their respective policy by issuing them with an invoice which gave them only seven days to reinstate their insurance policy or pay a fee.

The fee Integrity charged affected clients was greater than was permitted by Integrity’s fees policy, and in some cases equal to the commission Integrity lost.

The FMA said Integrity told some affected clients failure to pay the fee would result in Integrity reporting them to INZ, , which Integrity said may result in an affected client’s visa being cancelled or deportation.

While Integrity did not make any report to INZ, it did seriously mislead an affected client when it told him that it had made a report, the FMA said.

The FMA also found Integrity tried to mislead it by altering an invoice before providing it to the FMA.

Integrity denied significant misconduct, saying invoicing errors were inadvertent or not material. It denied misleading clients or the FMA.

Peter Taylor, FMA director of specialist supervision and response, said: “Contrary to its name, this firm lacked any integrity with its clients.”

Integrity’s sole director and shareholder is Yuriy Bazhak, also a financial adviser at Integrity.

“Bazhak not only risked causing serious harm to his clients but preyed on their vulnerability through the threat of involving Immigration New Zealand,” Taylor said.

“Actions such as these undermine both the integrity and reputation of the financial advice profession.

“Cancelling Integrity’s licence is one of the strongest tools the FMA can use against a FAP and sends a clear message that this sort of conduct is not acceptable.”

The FMA said provisions have been made for the care of Integrity’s clients, who would be contacted by their new licenced financial advice provider or their insurer.