Registered financial advisers

Page last updated: 25 Jun 2020

IMPORTANT NOTICE

The Government has confirmed the start date to the new financial advice regime for Monday 15 March 2021. The transitional licensing application window remains open until then. In the meantime, the current Financial Advisers Act 2008 continues to apply.

Changes to how financial advice is regulated

The laws governing financial advice in New Zealand are changing. As part of the changes, the Government is removing the three current adviser types – Registered Financial Adviser (RFA), Authorised Financial Adviser (AFA) and QFE adviser – and all advisers will need to meet the same standards.

What transitional licensing means for a Registered Financial Adviser

The video below steps you through a scenario for an RFA with a small family business:

Who is an RFA

Registered Financial Advisers (RFAs) are individual advisers who are required to be registered under the Financial Advisers Act 2008 but who, because of the limited scope of their services and/or clients, do not need to become Authorised Financial Advisers.

Your obligations

RFAs must, when providing financial adviser services act with care, diligence and skill (section 33 of the Financial Advisers Act 2008), not engage in misleading or deceptive conduct (section 34), ensure advertisements are not misleading, deceptive or confusing (section 35) and comply with disclosure obligations when providing personalised services to retail clients.

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Registration and DRS member

RFAs need to annually renew their registration on the Financial Service Providers Register and notify the Registrar of changes. They must be a member of a dispute resolution scheme, if providing services to retail clients. See more

Financial advice

RFAs can provide financial advice for category 2 products. RFAs are permitted to provide a class service to a retail client, or a financial adviser service to a wholesale client.

Putting investor interests first is at the heart of raising the standards of how financial advice is conducted. All financial advisers must comply with the requirements of the Financial Advisers Act 2008 (FA Act). This includes disclosure obligations which are set out in regulations. See more

Act with care, diligence and skill

The obligation to exercise care, diligence and skill and not act in a way that is misleading, deceptive or confusing applies to all people who provide financial adviser services. See insurance and credit examples. In general, when providing advice, advisers must:

assess the product's suitability for the client's needs
explain the key features and any limitations of the product to the client
clearly articulate any limitations on the service being provided. See more

RFA disclosure statement

RFA disclosure statements must follow the prescribed format outlined in the regulations. This makes it easier for consumers to compare the services being offered by different advisers.

The explanatory notes that make up part of the regulations provides a starting point for understanding the requirements. You may not add any information to the prescribed form other than unobtrusive information such as a corporate logo. In addition, you should note the following:

Use your legal name which should be the same name listed on the Financial Service Provider's Register. This ensures a client can easily check details on the register.
You must provide the document to your client in person or send it by email. You cannot just post it on your website or provide a link to the website. Links may break and if you update your disclosure statement your client won't have access to the version that applied at the time you provided advice.
Your statement can include an electronic signature so long as such a signature meets the requirements of the Electronic Transactions Act 2002. These include requirements such as the signature adequately identifying the adviser and the person receiving the disclosure document consenting to be given a document with a scanned signature. Please see the Electronic Transactions Act for detail on the requirements.
You cannot provide a joint disclosure statement with another adviser. Although the Act refers to joint disclosure, regulations to enable this are not currently in place. See more

Monitoring

Any person can complain to the FMA about the activities of an RFA and FMA can investigate that complaint and take appropriate action.

RFAs are not subject to disciplinary committee proceedings under the Act but we have a range of enforcement actions we can take. The Registrar may also deregister RFAs, or we may give a direction to deregister an RFA in certain circumstances. See Financial Service Providers (Registration and Dispute Resolution) Act 2008, sections 18A to 18C.