This page explains what the change means, and the steps you need to take before 15 March 2021, if you/your business intend(s) to operate as a Financial Advice Provider in the new regime.
In the meantime, the current Financial Advisers Act 2008 continues to apply.
A financial advice provider (FAP) is an individual or entity (e.g. a company) that provides a "financial advice service". An individual or entity provides a financial advice service if they give regulated financial advice to their clients on their own account, or they engage others to give regulated financial advice to their clients on their behalf.
To use the term Financial Advice Provider from the start of the new financial advice regime on Monday 15 March 2021, an individual or entity must be registered on the Financial Service Providers Register (FSPR).
If you provide advice to retail clients, you also must either:
As a financial advice provider, you can engage financial advisers to work on your behalf to provide financial advice to your retail clients.
You can hold a financial advice provider licence in your own name (as an individual), or your company can hold the licence in its name (in which case you, personally, will need to be engaged by your company as a financial adviser and provide advice on its behalf).
Note that holding a financial advice provider licence in your individual name means you cannot call yourself a financial adviser and you will be personally responsible for any liabilities incurred as a financial advice provider, including liabilities for breach of legal duties.
To see some of the other ways you can operate in the new regime, Explore your options here.
All financial advice providers must be registered on the Financial Service Providers Register (FSPR).
This is a public register which is maintained by the Companies Office.
How you register will depend on how you intend to operate in the new financial advice regime. For more information, see the fact sheet Registering correctly on the FSPR.
Any authorised bodies under your licence, or financial advisers you engage, must also be registered on the FSPR.
At the start of the new regime, you will need to update your registration on the FSPR to link to any financial advisers you engage under your licence. You will have three months to do this from the start of the new regime.
More information about how to do this will be provided on the Companies Office website when available.
There are two phases to financial advice provider licensing: transitional and full.
Financial advice providers will initially be able to operate under a transitional licence and will have up to two years from the start of the new financial advice regime to obtain a full licence.
Find out how to apply for a transitional licence here.
After two years, the transitional period ends, all transitional licences expire and advice can no longer be provided under a transitional licence.
To continue providing financial advice after the two-year transitional period, anyone (individual or entity) who provides financial advice to retail clients must either hold a full Financial Advice Provider licence, or operate under another financial advice provider’s full licence.
There will be three classes of full FAP licence.
Once granted, full licences will be subject to seven standard conditions, as well as any specific conditions added to a licence, and any conditions under the FMC Act and FMC Regulations.
For a preview of what to expect, see our introductory guide to full licence requirements.
After the two year period the transitional competency regime (also known as the competency safe harbour) also comes to an end, and you must meet the competency requirements under the new Code of Professional Conduct.
A transitional licence will cost $465.75 (incl GST), plus $44.56 (incl GST) for any authorised body named on your application.
The cost of a full licence and the FMA levy (payable at annual confirmation) will vary based on how you choose to operate in the new regime.
You will also be charged a fee of $86.25 (incl GST) at annual confirmation.
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.
All financial advice providers will be regulated under the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA) and will need to meet certain duties and obligations. Most of these duties apply to everyone giving advice, but there are a few additional duties for licensed financial advice providers, particularly providers who engage others to give advice on their behalf.
If you give financial advice to retail clients, you must:
As a financial advice provider, you must also:
From the start of the new regime on Monday 15 March 2021, all transitional licence-holders and authorised bodies will need to comply with the transitional licence standard conditions. They include conditions imposed by the FMC Act, the regulations, and any conditions imposed by FMA.
You must create in a timely manner and maintain adequate records in relation to your financial advice service.
You must have an internal process for resolving client complaints relating to your financial advice service that provides for:
Read more about Standard conditions for transitional Financial Advice Provider licences
If any of the following occurs, the licensee or an authorised body must, as soon as practicable, send a report containing details of the matter to the FMA:
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
Download the full Code of Professional Conduct PDF
Under the transitional arrangements in the Act, 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 Adviser Act 2008 regime, 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 Adviser Act 2008. Note that this competency safe harbour expires at the end of the transitional licensing period, two years after the new financial advice regime begins.
You must disclose certain information to your clients to ensure they can make informed decisions.
You can view information about the disclosure regulations on MBIE’s website.
The FMA is one of several organisations that has a role in enforcing the new financial advice regime.
For an overview of what this will mean, see the MBIE fact sheets:
The new financial advice regime comes into effect on Monday 15 March 2021. Use this checklist to help you get ready as a financial advice provider:
Q: Why can’t I see my company’s registration when I search for it on the FSPR?
A: Companies that have been registered on the FSPR only become visible on the register once they are offering an active service.
If the only financial service you have selected on the FSPR is a transitional licence service (ie “Licensed Provider – Transitional Licence” or “Authorised Body – Transitional Licence”), then your company's registration will only become publicly visible on the FSPR from the start of the new financial advice regime on 15 March 2021.
If you need to update or amend your company’s FSPR details in the meantime, you can still login to the FSPR to do that – unless your request relates to de-registering from the “Transitional Licence” service (see the FAQ below).
Visit the FSPR website for more info.
Q: I’m a financial adviser currently operating as a sole trader and want to continue to operate in a similar way in the new regime. I registered myself, personally, for the “Licensed Provider – Transitional Licence” service on the FSPR. However, I now want to apply for a transitional licence in my company’s name instead. How do I change this?
A: If you have already indicated your intention to register for a transitional licence in your own name, then you will have to apply to have this withdrawn. Please email licensing@fma.govt.nz to request this. You will then need to apply for a transitional licence in your company’s name.
See Registering Correctly on the FSPR for more info.
Transitional licence applications remain open until 15 March.
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