Christchurch-based financial advice firm Hope Group Limited (HGL) has been stripped of its licence after New Zealand’s markets regulator found its sole adviser repeatedly misled clients into taking out duplicate insurance policies, using “incorrect or false customer information” and leaving some customers paying double premiums for weeks at a time. The Financial Markets Authority (FMA) said the conduct amounted to “a serious and deliberate departure from the standards expected of a licensed financial advice provider” and was driven by commission, not client interests.
The FMA – Te Mana Tātai Hokohoko – announced it has cancelled the Financial Advice Provider licence of HGL, which had been authorised to give personal risk insurance advice to retail clients, including life and health, income protection, trauma and disability cover.
The action follows the termination of HGL’s distribution agreement with the insurer that first raised concerns, and a subsequent FMA inquiry into the firm’s affairs. Executive Director of Response and Enforcement, Louise Unger, said the regulator moved after reviewing 14 policy applications submitted by HGL’s sole director and financial adviser, Junpu Wang, on behalf of 13 customers. That review “identified serious conduct issues resulting in material breaches of obligations.”
At the heart of the case was a pattern of selling second policies to existing clients. According to the FMA, Mr Wang submitted “second policy applications for existing clients using incorrect or false customer information to conceal that the policies were duplicates.” In some instances, he also “completed an authority to accept a direct debit form on behalf of a client without obtaining the client’s authentic signature.”
The regulator found that, over a significant period, some clients were left unknowingly paying for two policies with the same or similar cover because HGL “failed to obtain client consent for both first and second policies…to remain active,” causing them to pay double premiums. Clients were also allegedly “misled…by recommending second policies to benefit from lower premiums under a promotional offer, despite clients being ineligible (e.g., already existing policyholders).”
The FMA said HGL failed at the most basic test of financial advice: making sure customers understood what they were being sold. The investigation found HGL “failing to ensure clients understood the advice provided.” Some were wrongly told a new policy was needed because their existing cover “would become more expensive after 24 months.” In two cases, clients were advised to take out a new policy “to obtain a second luxury item – despite being ineligible for that benefit.”
The regulator was blunt about motive. “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,” Ms Unger said.
The financial impact was twofold. HGL and Mr Wang obtained $37,374 in upfront commissions, while affected clients paid two sets of premiums on overlapping cover for up to 27 weeks, leading to overpayments totalling $5,342.34.
Despite the findings, the FMA said Mr Wang has refused to accept responsibility. “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,” Ms Unger said.
HGL operated out of Christchurch as a licensed financial advice provider focused on personal risk insurance for retail clients, selling life and health insurance, income protection, trauma and disability cover. Its business model was built around placing clients with an insurer under distribution arrangements that allowed it to earn upfront commissions on new policies. The FMA’s action now removes HGL from the regulated advice market and effectively ends its ability to operate as a financial adviser.
The regulator has framed the cancellation as both a consumer protection measure and a signalling move to the broader industry. “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,” Ms Unger said.
The case has already had wider repercussions. The insurer involved has contacted all impacted clients and “made arrangements to ensure they are supported,” including remediation steps for those left paying double premiums. In addition to losing its licence, HGL and Mr Wang have been deregistered from the Financial Service Providers Register (FSPR), and the matter has been reported to Police.
The FMA has also stressed the importance of public accountability in this sort of enforcement action. “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,” Ms Unger said.
The cancellation of HGL’s licence and its deregistration from the FSPR underscore the regulator’s message that using duplicate policies, falsified information or promotional offers to drive commission – while leaving customers worse off – is fundamentally incompatible with the obligations attached to a New Zealand financial advice licence.
