Here we provide answers to some of the common questions about the financial advice changes. We cover legislation, licensing and how to request information. If you can’t find the answer you need, please email email@example.com.
A: Financial advice providers giving advice to retail customers need to either hold a licence or be an authorised body under a licence.
If you provide advice to wholesale clients only, you do not need a licence but certain duties still apply – such as the duty to give priority to your client’s interest when there is a conflict, and to exercise care, diligence and skill when giving advice. For more information, see Who needs a licence.
Q: What is a transitional licence?
A: Transitional licensing is the first phase of the new financial advice regime.
A transitional Financial Advice Provider licence is valid for up to two years from 15 March 2021.
If you did not get your transitional licence before the start of the new regime, you cannot provide advice to retail clients until you have a full licence – unless you provide advice under another financial advice provider’s licence.
Q: What is a full licence?
A: A full licence is a licence you must have before your transitional licence expires if you wish to continue providing regulated financial advice to retail clients.
If you are not applying for your own full licence, you must operate under another financial advice provider’s licence.
Q: What happens if I apply for, but don’t receive approval of my transitional licence by 15 March?
A: If any financial advice provider hasn’t received written confirmation that their transitional licence has been granted by 15 March 2021, you and any persons intending to operate under that licence must temporarily stop providing advice until you receive that confirmation.
Q: Who will look after my clients if I do have to temporarily stop giving advice while I wait for confirmation my transitional licence has been granted?
A: We recommend you have a contingency plan in place, this may include having another licensed financial advice provider provide support to your clients.
A: Full licensing opened on 15 March 2021. Unlike a transitional licence, a full licence has no expiry date unless the FMA specifies one, you give notice to cancel your licence, or the FMA withdraws it.
Q: Can I still apply to be an AFA?
A: No, the AFA category ceased to exist on Monday 15 March 2021 and we are no longer accepting new AFA applications.
Nominated representatives will have less discretion than financial advisers and can only provide advice if the provider has sufficient processes and controls in place. These processes and controls must:
limit the nature and scope of the advice given
allow the financial advice provider to regulate the type of advice given and when
ensure nominated representatives have the correct competence, knowledge and skill needed for the advice being provided.
Q: Who can use nominated representatives under a transitional licence?
A: You can only use nominated representatives under a transitional licence if before 9 April 2019, you were:
a QFE, a member of a QFE group, or
a firm registered on the Financial Service Providers Register that provides class advice through staff who are not individually registered on the FSPR. The transitional licence will be subject to a condition that, in this case, the nominated representatives must not provide a personalised service.
A: Under the transitional arrangements in the Financial Services Legislation Amendment Act 2019, there is a “Competency safe harbour” built in to the transitional period at the start of the new regime. This generally means that, if you were registered or authorised to provide advice under the Financial Advisers Act 2008 regime, at the time the new regime began on 15 March 2021, you have up to two years to meet any new competency requirements. In the meantime, during the transitional period, you can continue to provide the advice you were legally permitted to under the Financial Advisers Act 2008. Note that this competency safe harbour expires at the end of the transitional period on 16 March 2023.
Q: Where can I find out more about the New Zealand Certificate in Financial Services (Level 5), version 2 that is referenced in the new Code?
A: There are a number of Tertiary Education Organisations (TEOs) that offer this certificate. For more information about what the certificate covers, and for a list of NZQA-approved providers, see the Skills NZ website.