A South Island businessman has been accused of arrogance in his dealings with the Financial Markets Authority and sentenced to community detention and community work for two breaches.
Garry James Patterson, 62, pleaded guilty in March to the two charges laid by the authority – failing to disclose that he was unregistered when providing financial services, and obstructing the FMA investigating by refusing an interview without reasonable excuse.
The prosecution is the first of its type, with Christchurch District Court Judge Jane Farish deciding against the FMA’s call for imprisonment to be considered.
She decided to impose 200 hours of community work and three months of community detention, and she recommended that Community Probation look for an agency placement where Patterson’s skills can be used “in a worthwhile fashion”.
Patterson had previously been convicted and imprisoned for signing up non-existent clients for insurance in 2006.
He was not registered as a financial service provider when a mortgage broking firm used him to provide insurance advice to clients from 2013 to 2015.
Judge Farish said he was taken on to work under the “umbrella” of the firm’s registration but had become the principal provider in six or nine cases, which led to the prosecution.
The clients had not lost funds because of his involvement, she said, but the firm’s principal had eventually lost its own registration and gone out of business, with the loss of jobs.
Judge Farish said the offending could be seen as causing some loss of public confidence in the industry and she said its showed “a degree of arrogance” in Patterson’s dealings with the authority.
The hearing was told that insurance sales had been Patterson’s business all his life. Defence counsel Tim Fournier said it was all he knew and “he did not have great, or other, employment options”.
Karen Chang, FMA Head of Enforcement, commented after the case: “Mr Patterson was not registered, which meant customers did not have the protections they should have had, such as access to an independent dispute resolution scheme. These protections are important as insurance products can be complex and people go to financial advisers to help them to get the appropriate product.”
He said Mr Patterson had also failed to comply with a statutory notice to attend an interview. Compliance with these notices was a legal requirement – it was not optional.
“The FMA’s information gathering powers, including conducting interviews, are vitally important for the performance of the FMA’s functions and in particular, the investigation of potential breaches of the law. In the appropriate circumstances, such as in this case, we will bring criminal charges for non-compliance,” she said.