Authorised body under a financial advice provider licence

From the start of the new regime on Monday 15 March 2021, all authorised bodies under a Financial Advice Provider licence will need to comply with the transitional licence conditions. They include conditions imposed by the FMC Act, the regulations, and any standard and other conditions imposed by FMA.

1. Record Keeping

You must create in a timely manner and maintain adequate records in relation to your financial advice service.

• Your records must be kept in a manner that ensures the integrity of the information and enables it to be conveniently inspected and reviewed by us. This may be electronic.
• Your records may be in any language providing you create and keep an accurate summary of the record in English and, if required by us, provide a full translation of the record into English by a translator approved by us
• Your records must be available for inspection by us at all reasonable times and must be kept for at least 7 years from
  • The date the record is made; and
  • The date the financial advice to which the record relates is given; and
  • The date any later record is made that refers to or relies on information in the record.

2. Internal complaints process

You must have an internal process for resolving client complaints relating to your financial advice service that provides for:

• Complaints to be dealt with in a fair, timely and transparent manner.
• Records to be kept of all complaints and any actions taken in relation to them including the dates on which each complaint was received and any action was taken in relation to that complaint.

Download the Standard Conditions for full FAP licences PDF

Anyone giving advice to retail clients is subject to a new Code of Professional Conduct for financial advice services. This outlines the standards of conduct, client care, competence, knowledge, and skill you need to meet when giving regulated financial advice to retail clients in New Zealand. The Minister of Commerce and Consumer Affairs approved the Code of Conduct in May 2019. It takes effect from the start of the new regime on Monday 15 March 2021.

A person who gives financial advice must:

Part 1: Ethical behaviour, conduct and client care

1. Treat clients fairly
2. Act with integrity
3. Give financial advice that is suitable
4. Ensure the client understands the financial advice
5. Protect client information

Part 2: Competence, knowledge and skill

6. Have general competence, knowledge and skill
7. Have particular competence, knowledge, and skill for designing an investment plan
8. Have particular competence, knowledge and skill for product advice
9. Keep competence, knowledge, and skill up-to-date 

Visit the Code of Professional Conduct for financial advice services website.

If you give financial advice to retail clients, you must:

• Take reasonable steps to ensure your clients understand the nature and scope of the advice being provided, including any limitations about that. For example, you must explain if you’re only able to give advice about certain products.
• 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 meet the competence, knowledge and skill requirements.
• Only recommend financial products to clients that are offered in compliance with the FMC Act and its regulations.
• Ensure you follow the new disclosure regulations and that any information you make available to clients is not false, misleading or incomplete.

Where an authorised body is a financial advice provider, it must also:

• Make sure anyone it engages to give advice under the licence complies with all the duties listed above.
• Have appropriate processes and controls in place when it engages nominated representatives. These should allow it to control the advice being given and the circumstances in which it is given.
• If it engages nominated representatives, ensure that it does not give, or offer to give, any inappropriate incentives.
• Comply with the standard conditions in the Financial Advice Provider licence and the general reporting condition.

As a financial advice provider, it’s your job to ensure your advisers and nominated representatives meet the competence, knowledge and skill standards set out in the Code of Professional Conduct.

If you’re engaging a financial adviser who was previously an authorised financial adviser (AFA), registered financial adviser (RFA), or QFE adviser, they may be able to take advantage of the competency safe harbour for two years up until 16 March 2023.

The competency safe harbour does not apply where

• The FAP engages new financial advisers. ie any financial advisers who newly register on the FSPR from 16 March 2021 must meet the full competence, knowledge and skill standards set out in Part 2 of the Code, in order to give regulated financial advice to retail clients. (Note that if the new financial adviser is a former QFE Adviser an exception may apply (see above)).

Or where

• The FAP engages nominated representatives and operates under a full licence. Any new nominated representatives it engages must meet the full competence, knowledge and skill standards set out in Part 2 of the Code, in order to give regulated financial advice to retail clients.

For more information, see the Competency safe harbour section of the Financial Adviser page.

Or visit the Code of Professional Conduct for financial advice services website.

You must disclose certain information where you give financial advice to clients to ensure they can make informed decisions.

You can view information about the disclosure regulations on MBIE’s website.

Financial Service Providers registering or filing their annual confirmation on the Financial Service Providers Register are required to declare if they are captured under the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act 2009 as a Reporting Entity and who they are supervised by. Find out more about your AML/CFT obligations on the AML FAQ web page.

If any of the following occurs, the authorised body under a Financial Advice Provider licence must, as soon as practicable, send a report containing details of the matter to the FMA:

• The authorised body is, or it is likely that either will become, subject to an insolvency event, or a director or senior manager of the licensee or any key personnel of an authorised body is adjudicated, or is likely to be adjudicated bankrupt (whether in New Zealand or overseas).
• The authorised body becomes aware that a relevant proceeding or action has been commenced or taken against the authorised body or any of the key personnel of the authorised body.
• Any key personnel of the authorised body resigns, is removed or otherwise ceases to hold the office or position, or is appointed, employed or engaged.
• An auditor of the authorised body resigns or otherwise ceases to hold office or is appointed (other than by way of reappointment).
• The authorised body proposes to change its name or its legal structure.
• The authorised body proposes to enter into a major transaction.
• The authorised body becomes aware that a transaction or an arrangement has been entered into or is likely that a transaction or arrangement will be entered into that will result or has resulted in a person obtaining or losing control of the authorised body.