Six Unauthorised Trades, a Missed Complaint Deadline and the FMA

This is plainly a complaint. Mr K is expressing dissatisfaction about a financial service, identifying specific trades, alleging they were unauthorised, quantifying a loss and asking for a refund. The fact that he copied the FMA does not change the analysis; if anything, it increases the need for a prompt and accurate response. The firm should have logged the complaint on 3 February, assigned an owner, acknowledged it promptly, and investigated the six trades. The acknowledgement on 5 February was not enough. A holding response that says 'we are looking into it' is not a substantive response and does not stop the clock running under the firm's own 20-working-day policy.

The firm also needed to consider the adviser's file note. Mr K allegedly said 'you decide' on 12 January. That is ambiguous. It may be an instruction to use discretion, but it does not by itself authorise six specific trades, and it is not a written authority. The firm should have interviewed the adviser, obtained phone records, reviewed the account mandate and checked whether the client had agreed to a discretionary service. If not, the trades may be unauthorised. The firm should have kept Mr K informed of delay and told him about the dispute-resolution scheme and his right to refer the complaint if it was not resolved. Leaving him without a response for over six weeks is a service failure and a compliance issue in its own right.

The firm needs to assess the matter as a potential material breach of its market services licence obligations, including fair dealing, client-order handling and complaints handling. The trigger for breach reporting is not a final admission of liability; it is the firm becoming aware of a material breach or likely material breach. By 25 March the compliance committee knew of the six alleged unauthorised trades, the client's loss, the missed internal deadline and the FMA copy. That is enough to require a documented assessment and, if material, a report to the FMA as soon as practicable. The firm should not wait for the adviser's return or for the client to refer the matter to the dispute-resolution scheme.

The report should describe what happened, when the firm became aware, the number of clients affected, the estimated loss, the root cause, the remedial steps and the status of the client complaint. It should avoid speculation but should not omit known adverse facts. The firm should also report the complaint-handling failure if it is material, because a six-week delay against a 20-working-day policy undermines confidence in the firm's systems. If the firm concludes the matter is not reportable, it should record the reasons. The compliance committee should also consider whether the adviser's conduct raises a competence or integrity issue requiring supervision, and whether other client files show similar 'you decide' instructions.

For Mr K, the firm should immediately assign a senior complaints owner, contact him, apologise for the delay, explain the investigation steps and give a realistic decision date. It should not ask him to waive rights or accept a quick payment without advice. The firm should review the six trades, the account mandate, the phone note and all communications, and decide whether the trades were authorised. If they were not, it should calculate the loss and make a fair remediation offer, including any costs. It should also tell Mr K about the approved dispute-resolution scheme and how to refer the complaint if he remains dissatisfied. Any settlement communication should be clear and not misleading.

Records should include the original complaint, the acknowledgement, the internal file notes, the investigation plan, interview notes, trade records, the decision and the client communications. The firm should preserve the adviser's emails and phone logs, because the 'you decide' note is central. It should also record the breach assessment and the FMA notification decision. Finally, the firm should review its complaints register for other overdue items, because a single six-week delay often indicates a queue problem. The board or compliance committee should receive a report on root cause, including whether the adviser was managing too many clients or whether supervision was ineffective.