Your duties and obligations under the new regime
As a provider of financial advice, you will be regulated under the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA). You will need to meet certain duties and obligations. Most of these duties apply to everyone giving advice, but there are a few additional duties for licensed financial advice providers, particularly providers who engage others to give advice on their behalf.
Here’s a summary of the main duties that apply to everyone who gives regulated financial advice to a retail client:
You must:
- Take reasonable steps to ensure your clients understand the nature and scope of the advice being provided. This includes any limitations on the nature and scope of the advice
- Where there’s a conflict of interest you must give priority to your client’s interests
- At all times exercise care, diligence and skill
- Comply with the new Code of Professional Conduct for Financial Advice Services requirements for ethical behaviour, conduct and client care and meeting the competence, knowledge and skill requirements.
- Only recommend financial products that comply with the FMC Act
- Ensure you follow the new disclosure regulations and that any information you make available to clients is not false or misleading
In addition, as a financial advice provider, you will have additional obligations, for example:
- Make sure anyone (financial advisers and/or nominated representatives) you engage to give advice complies with the main duties summarised above
- Have appropriate processes and controls in place when you engage nominated representatives. These should allow you to control the scope of advice being given and the circumstances in which it is given
- Comply with any licence conditions we may include when granting your licence. This includes the ‘general reporting condition’ that requires you to, as soon as practicable, contact the FMA in certain circumstances (for example, if you materially contravene your obligations, or change the legal structure of your business).
- If you have authorised bodies under your licence, you must also have arrangements in place to maintain appropriate control or supervision over the provision of the financial advice service by any authorised bodies under your licence.
