What is an authorised body under a financial advice provider licence
From the start of the new financial advice regime on 15 March 2021, a licensed financial advice provider (FAP) can have authorised bodies operating under its licence.
An authorised body is an entity (eg company or partnership) named on a FAP’s licence conditions that can provide the licensed service without needing its own licence.
A licensed FAP must agree to an authorised body operating under its licence. The authorised body must be named on the financial advice provider’s licence application, and the licensed FAP will be required to provide information about the authorised body when it applies for its licence.
Individuals cannot be authorised bodies under a FAP licence and individual financial advice provider licence holders cannot engage authorised bodies under their licences.
Note:In most cases, an authorised body will itself be a “financial advice provider” if it gives regulated financial advice to its clients on its own account, or if it engages others to give regulated financial advice to its clients on its behalf.
As a financial advice provider, an authorised body may engage financial advisers to give advice on its behalf. An authorised body may engage nominated representatives if permitted under the licence conditions or class of licence.
All authorised bodies under a Financial Advice Provider licence must be registered on the Financial Service Providers Register (FSPR). This is a public register which is maintained by the Companies Office.
Any financial advisers you engage as an authorised body must also be registered on the FSPR.
Engaging financial advisers
When your entity engages a financial adviser, you must record details of the engagement on the Financial Service Providers Register (FSPR).
This must be done within 3 months or the financial adviser may be deregistered if they offer no other services.
Watch the short video below to see how a FAP links to a financial adviser on the FSPR or visit the Companies Office website for more information.
When a financial advice provider applies for a full licence, it will need to pay a fee of $178.25 (incl GST) to the FMA for each authorised body named on its application.
The FMA levy (payable at annual confirmation) for an authorised body will initially be $759.00 (incl GST).
Note that MBIE have announced an increase in FMA levies, which will be phased in over the next three years. For full details, including the increased levy amounts (exclusive of GST) that will apply from 15 March 2021, 1 July 2021 and 1 July 2022 see the MBIE website.
The FMA levy (payable at annual confirmation) by a licensed financial advice provider will vary depending on how the financial advice provider chooses to operate in the new regime.
Authorised bodies will also be charged a fee of $86.25 (incl. GST) at annual confirmation.
The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.
A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.
A levy must be paid for every levy class the financial markets participant falls within. Levies are payable on the relevant leviable event as described in column 3 of Schedule 2 in the Regulations.
Some levy classes have been split in order to recognise the variations in size and nature of different financial market participants.
Most levies are paid when making an annual confirmation to the Registrar of Financial Service Providers (the Registrar).
Most levies are payable to the Registrar, via the (FSPR). However, some levies are payable directly to the FMA. This is set out in column 4 of Schedule 2 in the Regulations.
The following levy classes are invoiced directly by the FMA:
Levy Class 8, Levy Class 8A, Levy Class 10, Levy Class 10A and Levy Class 13.
The table below (see levy class description) provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
Levy Class description
The table below provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
Persons making an application for registration on the Financial Service Providers Register
Registered banks and licensed non-bank deposit takers
Licensed supervisors of debt securities and managed investment products in registered schemes
Managers (of registered schemes)
Persons who undertook trading activities on licensed markets, contributory mortgage brokers, trading financial products or foreign exchange on behalf of other persons (other than persons included in class 6A, 6B, 6C or 6D, authorised bodies that only provide the service under a market services licence held by a person in class 6A or 6D and DIMS wholesale providers) or licensed derivatives issuers
Licensed discretionary investment management service (DIMS) retail providers
Providers of a regulated client money or property service (as defined in section 6(1) of the FMC Act) other than persons included in class 6(a) or 6C
Custodians and persons providing custodial services
Crowdfunding service providers and peer-to-peer lending service providers
Licensed financial benchmark administrators
Licensed financial advice providers
All other financial service providers that are not included in any of classes 2 – 6H
Listed issuers (other than persons included in class 8A)
Small listed issuers
Lodgement of a product disclosure statement (PDS)
Licensed market operators
Licensed market operators that operate growth markets (other than persons included in class 10)
FMC reporting entities that lodge financial statements (or group financial statements) and auditor’s reports
Licensed overseas auditors
Persons that apply for registration or incorporation under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
Persons that are registered or incorporated and required to make annual returns under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.
Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:
provide services you are not registered for or state you are registered for a particular financial service when you are not
make a representation relating to any document or information required by the FSP Act or its regulations knowing that it is false or misleading, or omit any matter knowing such omission is false or misleading.
These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.
It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.
We have discretionary power to waive a levy (in whole or part).
We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.
The waiver power is not intended to be used to revisit settled policy positions.
Once we receive a waiver application and the fee, we will assess it. If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.
How to apply for a levy to be waived
You will need to email the following information to email@example.com with the subject line ‘Levy waiver application’.
Name of person or entity applying for the waiver.
Contact person for correspondence concerning the application including address, phone number and email.
Indicate the persons/entity who will receive the benefit of any waiver granted.
Specify which class(es) you seek a waiver from and whether a waiver is sought from the full levy or part and the amount thereof.
Let us know your preferred date for any waiver to take effect.
Explain why the waiver should be granted and why your circumstances are exceptional when compared with others in the same class.
Provide all relevant facts in support of your application.
Explain any regulatory benefit of FMA granting the waiver.
Give details of any previous contact with officials (including their names) at FMA or MBIE (including the Companies Office) on the matter.
How to pay your waiver application fee
You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.
The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.
We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.
How to pay
Electronic deposit or internet banking
Where bill pay is available please select ‘Financial Markets Authority - Other' Otherwise, our bank details are: Bank: Westpac Account name: Financial Markets Authority Account number: 03-0584-0198005-000
To ensure we process your payment correctly please provide the following information: Particulars: Payer’s name* Code: Waiver Reference: Applicant’s name You do not need to forward a hard copy of your application if paying electronically
* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.
What are the fees
A payment of $1,265 should accompany each application.
This covers the application fee of $115 set out in the Financial Markets Authority (Fees) Regulations 2011 and an advance of $1,150 (including GST) for fees and costs to be incurred.
These regulations set out charging rates of $230 (including GST) per hour for time spent by FMA Board members and $178.25 (including GST) per hour for time spent by FMA staff.
These regulations are set by MBIE.
How long does it take
Once we have been provided with all relevant information, it generally takes around six weeks to process an application.
This may be longer if any policy questions arise.
If your application is urgent, please provide the date you need the decision by.
You must also provide reasons for requesting urgent consideration.
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
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.
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, itmustalso:
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.
Competency safe harbour
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)).
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.
If a Financial Advice Provider has an internet site, it must make certain information publicly available in order to help retail clients find a provider that meets their needs (see regulation 229C).
We suggest that Financial Advice Providers with an internet site review its content to ensure that any references to the older Financial Advisers Act 2008 (for example, calling yourself an AFA) are removed.
Disclosures relating to advice
Certain other information must be given to retail clients when:
the nature and scope of the advice becomes apparent in order to enable clients to make an informed decision about whether to seek, obtain, or act on the advice (see regulation 229D); and
the advice is given (if not before) in order to help clients make an informed decision about whether to act on the advice (see regulation 229E).
If a complaint is made, the person making the complaint must be given information about the complaints and dispute resolution process (see regulation 229F)
The regulations include general requirements for the form and manner of disclosure (see regulation 229H).
All disclosures must be
presented in a clear, concise, and effective manner;
given prominence if presented with other information;
in a format, font, and type size that are easily readable if given in writing; and
free of charge.
You can also make information available or give information in the form and manner you reasonably consider appropriate, having regard to any stated purpose of the relevant regulation (see regulation 229H(3)).
For example, provided all other requirements are met, including a way to allow a recipient to readily store disclosure information in a permanent and legible form, disclosure of information through an email with a prominent hyperlink may be appropriate.
In this context, prominence may require a suitable warning as to the nature and importance of the information.
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.
All transitional and full licence holders and authorised bodies need to comply with standard conditions.
The standard conditions for FAP transitional licences are:
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.
To see what information you’ll need to provide when you apply for a FAP full licence, see the Complaints Handling section in the FAP full licence application kit.
3. Regulatory returns
Standard Condition 3 only applies to FAP full licences.
You must provide information to the FMA on a periodic or ongoing basis, or on request, in accordance with the requirements set out in a Regulatory Return Framework and Methodology. The requirements are presently not yet in place and the FMA will consult with the industry prior to publication of the requirements.
Standard Condition 4 only applies to FAP full licences.
Summary of what’s required
You must ensure that the providers of any systems or processes you outsource to are capable of performing the service to a standard that meets your licence obligations. The condition only relates to those outsource arrangements where you rely on the outsource provider to meet your licensee obligations.
Standard Condition 5 only applies to FAP full licences.
Summary of what’s required
You must have and maintain an up-to-date business continuity plan that’s appropriate for the scale and scope of your financial advice service business.
If you use any technology systems that are critical to the provision of financial advice service you must ensure the information security of those systems is maintained. You must notify us within 10 working days of discovering any material information security breach.
To see what information you’ll need to provide when you apply for a FAP full licence, see the Business Continuity Plan and Cybersecurity sections of the FAP full licence application kit.
6. Ongoing requirements
Standard Condition 6 only applies to FAP full licences.
Summary of what’s required
You must continue to satisfy the requirements for licensing at all times while you hold your full licence. The requirements are specified in sections 396 and 400 of the FMC Act. These requirements include (not an exhaustive list) your directors and senior managers remain fit and proper persons, you are capable of effectively performing its service, there is no reason to believe you are likely to contravene your obligations and you are registered on the FSPR.
There are similar requirements for your authorised bodies, including that arrangements are or will be in place to ensure that you maintain appropriate control or supervision over the provision of the service by the authorised body.
Standard Condition 7 only applies to FAP full licences.
Summary of what’s required
You must notify the FMA if you implement any material change to the nature of or manner in which you provide your financial advice service. The notification must be made, in writing, within 10 working days of implementing any such material change. For example, if you change your compliance approach to relying on procedures, change your systems and expertise, commence to engage any financial advisers or nominated representatives where you were not previously permitted under your licence class, etc.
This notification requirement is in addition to the statutory notification obligation which requires notification of certain matters such as resignation or removal of directors, senior managers and key personnel of your organisation or an authorised body etc. Refer to Regulation 191 of FMC Regulation and section 412 of the FMC Act for the statutory notification obligations.
Q: How does a licensed financial advice provider (or authorised body) notify the FMA when they add or remove a financial adviser?
A: This important step is completed on the Financial Service Providers Register (FSPR). To see how to link to or remove an adviser from your FAP (or authorised body), watch this short video or visit the Companies Office website for more information. The FMA will be notified of the change automatically when you update the FSPR. No separate notification to us is necessary.
Q: We want to link to a financial adviser on the FSPR – why can’t we find their details?
A: If you have followed the steps on the Companies Office website and are still unable to link to a financial adviser on the FSPR, this may be because the adviser has either applied for, or holds, a Financial Advice Provider licence in their individual name. If this is the case, they will not appear as a “Financial adviser” on the FSPR. That’s because a financial advice provider cannot also be a “Financial adviser”.
If the person concerned no longer wants to apply for or hold a FAP licence themselves, they should email firstname.lastname@example.org to discuss next steps. Once the FAP licence service is removed from their FSP registration they will be able to register as a financial adviser. Your FSP can then link to them.