Authorised body (in relation to the financial advice service)
An entity named on a financial advice provider’s licence that can provide the licensed service without needing its own licence. Authorised bodies must register on the Financial Service Providers Register as a financial advice provider. Both the licence holder and the authorised body are responsible for the authorised body’s conduct, advice and actions, and for ensuring it meets all market services licensee obligations.
Code of Professional Conduct for Financial Advice Services (CODE)
The Code sets out minimum standards of professional conduct in terms of competence, knowledge, skills, ethical behaviour, conduct and client care. It also sets out any requirements for continued professional development and comes into effect from Monday 15 March 2021. It applies to all financial advice providers, financial advisers and nominated representatives.
Code working group
An independent group appointed by the Minister of Commerce and Consumer Affairs to prepare the new Code of Conduct. You can find information about the group and its current members on the Financial Advice Code Working Group website.
Competency exemption (also referred to as competency safe harbour)
Under the transitional arrangements in the Act, there is a "Competency safe harbour" built into the transitional period at the start of the new regime.
If you’re an RFA immediately before 15 March 2021, you have a transitional licence or you are engaged by a licensed financial advice provider to give advice on their behalf, and you don’t already meet the competence knowledge and skill requirements of the new Code, you can make use of the two-year “Competency safe harbour”, while you work towards meeting those standards. This competency safe harbour applies to you, personally: it allows you to continue, for the first two years of the regime, to give the financial advice that you were legally permitted to provide as an RFA for the first two years of the regime, even if you move to work for a different financial advice provider.
If you’re an AFA immediately before 15 March 2021, the new Code provides ways in which you may use your AFA authorisation to demonstrate your competence, knowledge, and skill (as set out in part 2 of the Code). We encourage you to check your authorisation against the new Code to make sure you meet the particular competency requirements for the advice you intend to give.
After two years, the competency safe harbour expires and you will need to meet the standards of competence, knowledge and skill outlined in Part 2 of the new Code.
Competency standards (competency requirements)
These are standards set by the Code that must be met, or qualifications that must be held, in order to provide regulated financial advice under the new regime. See also ‘competency exemption’ for advisers transitioning to the new regime.
Digital advice (also known as robo-advice)
Automated financial advice generated by a computer program using algorithms, based on information provided to a financial advice provider – usually provided through a website or mobile app without any direct human involvement.
Dispute resolution scheme (DRS)
Generally, anyone who provides financial services to retail clients must be a member of a DRS. A DRS helps New Zealanders resolve disputes with their financial services provider – at no cost to the client.
A DRS will investigate complaints about:
any breach of contract between a provider and a consumer
providers failing to comply with the industry code of practice
provider conduct that is not fair or reasonable, and
breaches of the law.
Current approved DRSs are:
Financial Dispute Resolution Service (FDRS)
Financial Services Complaints Limited (FSCL)
Insurance & Financial Services Ombudsman
This is when a provider (either directly or through a financial adviser or nominated representative):
makes a recommendation or gives an opinion about buying or selling financial advice products, or
designs an investment plan based on a client’s investment goals and analysis of their financial situation, which includes one or more recommendations on how to achieve those goals.
Financial advice provider (FAP)
An individual or business who provides a financial advice service to retail clients must by the start of the new regime, in the case of an individual have a transitional licence, or in the case of a business either have a transitional licence or be an authorised body of a licenced FAP.
Financial advice service
When a financial advice provider engages one or more individuals to give financial advice on their behalf or provides financial advice on their own account.
Financial adviser (in the new regime)
An individual registered on the Financial Service Providers Register to provide a financial advice service, who is not a financial advice provider.
Financial Advisers Disciplinary Committee (FADC)
An independent body that conducts disciplinary proceedings arising from complaints about financial advisers.
Any service defined as a financial service in the FSP Act.
Financial Service Provider (FSP)
A person who provides or offers to provide a financial service (as per the FSP Act).
Financial Service Providers Register (FSPR)
A searchable register of people, businesses and organisations that provide financial services in New Zealand. The register contains key information about FSPs including the financial services they provide, any relevant licences they hold and the dispute resolution scheme they belong to.
Financial Markets Conduct Act 2013.
FSLAB (FSLA Bill)
The Financial Services Legislation Amendment Bill. FSLAB creates a new framework for giving financial advice by amending the Financial Markets Conduct Act 2013.
Financial Service Providers (Registration and Dispute Resolution) Act 2008. This Act sets out the requirements for financial service providers to be registered on the Financial Service Providers Register and to belong to a dispute resolution scheme.
Financial Service Provider number – the registration identifier from a record on the FSPR.
The licence that must be held by a financial advice provider when their transitional licence expires, if they want to continue providing advice to retail clients after the two-year transitional period.
This started on 15 March 2021 when the amendments to the Financial Markets Conduct Act, regulations, and Code of Professional Conduct for financial advice services (Code) came into force. Under the new regime, anyone who provides financial advice must either have a licence (if they are a financial advice provider) or operate under another financial advice provider’s licence.
Nominated representative (in the new regime)
An individual engaged by a licensed financial advice provider to provide regulated financial advice on their behalf. For transitional licences, only certain registered firms (for example, QFEs as at 8 April 2019) can engage nominated representatives. Nominated representatives do not need to register on the Financial Service Providers Register.
Prioritising client’s interests (also known as client’s interests first)
A requirement to give priority to the client’s interests when there is a known conflict between the financial advice provider’s interests and the client’s interests when giving financial advice. It applies regardless of whether the client is retail or wholesale.
The process of registering on the Financial Service Providers Register.
A Bill becomes law after it has passed its third reading in the House of Representatives and is given Royal Assent by the Governor-General.
Appointed at the start of each Parliament after a general election. Members of the select committee work together to consider topics that the House of Representatives needs more information and recommendations about (such as proposed laws and Government spending, petitions and international treaties). Select committees can also initiate inquiries and briefings to investigate important issues and topics. The Economic Development, Science and Innovation select committee considered the Financial Services Legislation Amendment Bill and reported back to the House of Representatives on recommended changes to the Bill.
A two-year period starting on the first day of the new regime on Monday 15 March 2021 and ending two years after that date. During this period financial advice providers are able to operate under a transitional licence and rely on the competency exemption.
The licence that must be held from the start date of the new regime, Monday 15 March 2021, by financial advice providers providing advice to retail clients.
Transitional licence effective date
The date a transitional licence comes into effect. All transitional licences approved before the start of the new regime on Monday 15 March 2021, will have the first day of the new regime as the effective date.
Transitional licence expiry
The date a transitional licence expires. Transitional licences will expire on the earlier of the transitional licence being cancelled (using a regulatory power), a full licence being granted, or two years after the new regime takes effect.
Transitional licensing application period
The period when financial advice providers could have applied for a transitional licence. This period started on 25 November 2019 and closed on Monday 15 March 2021.