1. News and resources
  2. FMA Stories
  3. March 2021 – A new financial advice regime begins for New Zealand

March 2021 – A new financial advice regime begins for New Zealand

Page last updated: 15 March 2021

By John Botica
FMA Director of Market Engagement

This week marks an important milestone in the building and deployment of a new financial advice regulatory regime for New Zealand.

It’s the culmination of nearly five years’ work, which kicked off with MBIE’s review of the Financial Advisers Act 2008 and consultation with industry on new legislation passed by Parliament in 2019.

This new regulatory regime is designed to help improve people’s financial resilience by making it easier to access high-quality financial advice that will better prepare them for the future.

And the changes are significant. The regulation of financial advice now falls under the Financial Markets Conduct Act 2013 with the FA Act 2008 now repealed. An important feature of the new regime requires everyone providing retail financial advice to place the interests of their clients first.

From today, anyone who gives regulated financial advice to retail clients must either hold, or operate under, a Financial Advice Provider licence.  Licensing is a two-step process: with existing advisers operating under a transitional licence valid for up to two years and moving to a full licence within that period. 

More than 10,200 financial advisers have come into the new licensing system, with more than 1700 transitional licences approved and nearly 1000 authorised bodies.

Anyone wishing to provide financial advice to retail clients who isn’t already operating under a transitional licence must be issued with a full licence before they can provide advice. Applications for these full licences open today.

The new Code of Conduct also comes into effect today, together with the new obligations and duties under the legislation.

We know that this has been a big change for the financial advice industry which has had to adapt, while also dealing with the impact of COVID-19.  It was encouraging to see so many advisers supporting their clients during the pandemic, while also adapting their business models in line with the new licensing requirements.

Thanks to all those who have given us feedback as we developed and fine-tuned our approach to this new regime.  This input has been invaluable to help us get to this point – which in many ways marks the “end of a beginning”. 

We now head into the next phase of the regime, with the next two years giving advisers time to meet new competence, knowledge, and skills standards under the new code. 

We’re confident that the constructive spirit we’ve seen from the financial advice community will continue to help guide our thinking as we move forward. Working together, we can keep building the trust and confidence in the value of financial advice for all New Zealanders.

Keep up to date with the rollout of the new licensing regime here.