Financial Advice Provider (FAP)

Before applying for a full licence with the FMA, all financial advice providers must be registered for the “Financial advice provider – licensee – full licence” service on the Financial Service Providers Register (FSPR).

The FSPR is a public register which is maintained by the Companies Office.

Any authorised bodies under your licence, or financial advisers you engage, must also be registered on the FSPR.

Fees are payable for some transactions on the FSPR, including when you register, and when you complete your annual confirmations. Visit the FSPR website for more information about how to register, maintain or update your registration.

Financial advice providers will initially be able to operate under a transitional licence. Transitional licences are valid for up to two years from 15 March 2021.

After two years, the transitional period ends, all transitional licences expire and advice can no longer be provided under a transitional licence.

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 2023, 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 for financial advice services.

From 16 March 2021, anyone applying for a Financial Advice Provider licence must apply for a full licence.

There are three classes of full FAP licence.

Once granted, full licences are 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.

Find out how to apply for a Financial Advice Provider full licence.

There are three classes of Financial Advice Provider licence.

You should apply (and be assessed) for the class of Financial Advice Provider (FAP) licence that best suits your particular circumstances and the nature of the service your FAP and any authorised bodies intend to provide.

As a general indication:

• The Class 1 licence application process is purpose-built for sole advisers
• Class 2 licences are intended for businesses that engage more than one adviser
• Class 3 licences are most suited to large organisations that engage nominated representatives.

Download the fact sheet on the three licence classes

When you engage a financial adviser under your licence, you must record details of the engagement on the Financial Service Providers Register (FSPR).

You’ll need to do this within three months, or the financial adviser may be deregistered if they offer no other services.

Remember that you may need to link to yourself on the FSPR if your company will engage you, personally, as a financial adviser under its licence.

Watch the short video below to see how to link to a financial adviser on the FSPR or visit the Companies Office website for more information.

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.
• Where there’s a conflict of interest you must give priority to your client’s interests. Download the customer care – managing conflicts of interest self-assessment tool PDF to help your FAP get ready to meet this duty as part of preparing to apply for a full licence.
• At all times exercise care, diligence and skill.
• 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.

As a financial advice provider, you will have additional obligations, for example:

• Make sure anyone you engage to give advice under your licence complies with all the duties listed above.
• Have appropriate processes and controls in place when you engage nominated representatives. These should allow you to control the advice being given and the circumstances in which it is given.
• If you engage nominated representatives, ensure that you do not give, or offer to give, any inappropriate incentives.
• Tell the FMA if you materially contravene your obligations and must also let us know if you change the legal structure of your businesses or make certain other changes, such as changes in directors or senior people.
• Comply with any licence conditions we may include when granting your　licence, including the standard conditions, and the licence conditions imposed by law.

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:

• The licensee or 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 licensee or an authorised body becomes aware that a relevant proceeding or action has been commenced or taken against the licensee, an authorised body, a director or senior manager of the licensee, or any of the key personnel of an authorised body.
• A director or senior manager of the licensee or any key personnel of an authorised body resigns, is removed or otherwise ceases to hold the office or position, or is appointed, employed or engaged.
• An auditor of the licensee or an authorised body resigns or otherwise ceases to hold office or is appointed (other than by way of reappointment).
• The licensee or an authorised body proposes to change its name or its legal structure.
• The licensee or an authorised body proposes to enter into a major transaction.
• The licensee or an 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 licensee or the authorised body.

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 

Visit the Code of Professional Conduct for financial advice services website.

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)).

Or where

• 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.

For more information, see the Competency safe harbour section of the Financial Adviser page.

Or visit the Code of Professional Conduct for financial advice services website.

As a part of the financial advice regime introduced in March 2021, there are new disclosure obligations for those providing regulated financial advice to retail clients.

These are detailed in regulations 229A to 229J of the Financial Markets Conduct Regulations 2014.

Publicly available information

• 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).

Complaints information

• If a complaint is made, the person making the complaint must be given information about the complaints and dispute resolution process (see regulation 229F)

More details about the information required to be disclosed can be found in Schedule 21A of the regulations here.

Requirements for form and manner of disclosure

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.

• Change of director or senior manager of a licence holder or change of key personnel of an Authorised Body
• Removing an Authorised Body

Transitional only:

• Add a single Authorised Body
• Add multiple Authorised Bodies, two-part form:
  
  • Part one
  • Part two

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.

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.

Summary of what’s required

• You must create timely and adequate records in relation to your financial advice service.
• You must keep records for at least seven years.
• Your records must be available to be inspected and reviewed by the FMA.

For more information, download the Standard Conditions for FAP full licences PDF.

Tools and help available

• Download the record keeping self-assessment tool PDF to help your FAP get ready to meet this full licence condition.
• To see what information you’ll need to provide when you apply for a FAP full licence, see the Record Keeping section in the FAP full licence application kit.

Summary of what’s required

• You must have a process for resolving client complaints.
• Complaints must be dealt with in a fair, timely and transparent manner.
• You must keep records of all complaints, including the date the complaint was received and any action you took including if no action was taken then the reasons why.

For more information, download the Standard Conditions for FAP full licences PDF.

Tools and help available

• Download the complaints handling self-assessment tool PDF to help your FAP get ready to meet this full licence condition.
• 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.

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.

For more information, download the Standard Conditions for FAP full licences PDF.

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.

For more information, download the Standard Conditions for FAP full licences PDF.

Tools and help available

• Download the key outsourcing arrangements self-assessment tool PDF to help your FAP get ready to meet this full licence condition.
• To see what information you’ll need to provide when you apply for a full licence, see the Outsourcing section of the FAP full licence application kit.

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.

For more information, download the Standard Conditions for FAP full licences PDF.

Tools and help available

• Download the cyber security and BCP self-assessment tool, PDF to help your FAP get ready to meet this full licence condition.
• Refer to the FMA information sheet Developing cyber resilience for financial advice providers for tips on building your cyber capability.
• 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.

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.

For more information, download the Standard Conditions for FAP full licences PDF.

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.

For more information, download the Standard Conditions for FAP full licences PDF.