On Monday 15 March 2021, the laws governing financial advice in New Zealand are changing.
To give financial advice to retail clients in the new financial advice regime, advisers must either hold a Financial Advice Provider (FAP) licence, or be engaged to operate under a Financial Advice Provider’s licence as a Financial Adviser, or Nominated Representative (if they’re an employee of a bank, for example).
To help the advice industry transition to the new financial advice regime, there will be two phases to licensing: transitional and full.
The FMA is currently accepting applications for transitional licences.
From Monday 15 March 2021, transitional licence applications close and applications open for full Financial Advice Provider licences.
How to prepare for the new financial advice regime
The way you prepare for the financial advice regime will depend on your plans for your business. It’s important to seek professional advice before deciding whether to apply for a Financial Advice Provider licence.
You can apply for a licence in your individual name or in your company name.
If you apply for a licence in your individual name you must refer to yourself as a financial advice provider – not a financial adviser – and you will be personally responsible for any liabilities incurred as a financial advice provider (including liabilities for breach of legal duties).
If you apply for a licence in your company name, your company will then engage you, personally, as a financial adviser under its Financial Advice Provider licence.
There are two steps to applying for a transitional licence:
Login to the FSPR on the Companies Office website and register your intention to apply for a transitional Financial Advice Provider licence. Make sure you register in the name of your company if it’s your company that will hold the licence. Read How to register correctly on the FSPR for instructions on how to do this.
Please note that licence applications can take up to 60 working days to process.
In the event that your licence application is not processed before the new regime commences on 15 March 2021, you, and any persons intending to be engaged or authorised under your licence, will need to stop providing financial advice until you receive confirmation that a transitional licence has been granted.
Unsure how you wish to operate under the new financial advice regime? We’ve created an easy-to-navigate tool to guide you through some of the options. It covers some of the more straightforward ways you can operate and includes factsheets and guides to help you prepare for the start of the new regime on Monday 15 March 2021.