New financial advice regime changes

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Page last updated: 15 March 2021

The new financial advice regime started on Monday 15 March 2021.
The Financial Advisers Act 2008 has been repealed. The Financial Markets Conduct Act 2013, (as amended by the Financial Services Legislation Amendment Act 2019), sets out the duties that apply to providers and individuals.
From the start of the new financial regime (Monday 15 March 2021), if you plan to provide regulated financial advice to retail clients on your own behalf (or if you want others to provide advice to retail clients on your behalf), you will need a Financial Advice Provider licence.
If you plan to provide advice on behalf of another financial advice provider, you won’t need a licence.
Licensing is being introduced in two phases: transitional and full.
Transitional licences are valid for up to two years from 15 March 2021.
Transitional licence-holders will need to apply for and be granted a full licence by 16 March 2023 if they want to continue providing advice under their own licence.
From 16 March 2021, anyone applying for a Financial Advice Provider licence must apply for a full licence.

The new regime changes can be summarised as:

Financial Services Legislation Amendment Act

The Act passed into law in April 2019, repealing the Financial Advisers Act 2008 on 15 March 2021.

The Financial Markets Conduct Act 2013, (as amended by the Financial Services Legislation Amendment Act 2019), sets out the duties that now apply to providers and individuals.

New Code of Conduct

Anyone providing 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 providing financial advice in New Zealand. The Minister of Commerce and Consumer Affairs approved the Code of Conduct in May 2019.

New disclosure requirements

You must disclose certain information to your clients to ensure they can make informed decisions.

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

New registration requirements

To address misuse of the Financial Service Providers Register (FSPR), you will only be able to register as a financial service provider if you are providing services to New Zealand clients. This is a new requirement, which aims to improve client confidence and protect New Zealand’s good business reputation both at home and abroad.

Standard Conditions

Financial advice provider licences are subject to conditions. From 15 March 2021, all licence-holders must comply with these conditions.

Transitional licences will be subject to two standard conditions, as well as conditions imposed by the FMC Act, the regulations, and any conditions imposed by FMA. See the Standard conditions for transitional licences.

Full licences will be subject to seven standard conditions, as well as conditions imposed by the FMC Act, the regulations, and any specific conditions imposed by the FMA. See the Standard conditions for full licences.

Why changes are happening

The Financial Services Legislation Amendment Act introduces changes to ensure the conduct and client-care obligations of financial service providers and the regulation of financial markets remain fit for purpose. It also addresses misuse of the financial service providers register by offshore entities. The changes are designed to:

remove regulatory boundaries, such as the current adviser classifications (AFA, RFA, and QFE), the distinction between ‘class advice’ and ‘personalised advice’ and category 1 and 2 products
allow financial advice to be provided online as well as in person
set industry-wide standards for conduct and competence

Our role

Parliament is changing how we regulate financial advice in New Zealand. A number of government agencies are involved in this process. Below we outline which areas each of us is responsible for.

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Financial Markets Authority

Provides information on regulatory requirements, like guidance about the licensing application process
Assesses and issues licences for financial advice providers
Collects data, and monitors compliance and outcomes through ongoing supervision
Takes enforcement action when needed.

Ministry of Business, Innovation and Employment

Responsible for monitoring and evaluating the performance of the Financial Advisers Act and the Financial Service Providers Act
Carried out the review of the above acts
Recommended legislative changes to government
Considers and recommends regulations containing technical details to support the legislation. This includes:

the disclosure requirements for those providing financial advice, and
setting fees and ongoing levies.

NZ Companies office

Registers relevant firms and individuals on the Financial Service Providers Register (FSPR.)

Code Working Group

An independent group appointed by the Minister of Commerce and Consumer Affairs to prepare the new Code of Professional Conduct for financial advice services.
This sets out minimum standards of conduct, client care, competence, knowledge and skill.
The Minister of Commerce and Consumer Affairs approved the Code of Conduct in May 2019.
From 15 March 2021, the new code of Professional Conduct for Financial Advice Services came into effect. The code sets standards of competence, conduct and client care for the whole financial advice industry.