Who is a Financial Adviser?
To use the term Financial Adviser from the start of the new financial advice regime on the 15 March 2021, you must be registered on the Financial Service Providers Register (FSPR) and engaged by a licensed financial advice provider (FAP) (or authorised body).
Only individuals can be financial advisers and you cannot engage other financial advisers to work on your behalf.
Financial advisers won’t need a transitional licence.
To see some of the other ways you can operate in the new regime, Explore your options here.
Registration
The Companies Office will automatically transition all Authorised Financial Advisers (AFAs) and Registered Financial Advisers (RFAs) to the new category of "Financial adviser" on the FSPR at the start of the new regime on the 15 March 2021.
Financial advisers must then ensure that the licensed financial advice provider (or authorised body) that has agreed to engage them, links to them on the FSPR. More detail about this will be provided on the Companies Office website when available.
Any financial adviser who is not linked to a licensed financial advice provider (or authorised body) on the FSPR within three months of the start of the new regime, will be deregistered.
For more information, read the fact sheet Registering correctly on the FSPR.
Note: If you’re not already registered on the FSPR, and plan to provide financial advice prior to the start date of the new regime in early 2021 you must make sure you’ve registered for the appropriate financial adviser service and are complying with the Financial Advisers Act 2008 (FAA). You can read more about who can provide financial advice under the FAA here.
If you are already registered, we recommend that you log in and check your contact details are correct so we can keep you updated about the new regime.
Costs
If you’re currently listed on the FSPR as an AFA or an RFA you have nothing to pay as the Companies Office will automatically transition you to the new category of “financial adviser”.
However, from the start of the new regime on Monday 15 March 2021, financial advisers will be charged an FMA levy (payable to the Companies Office at FSPR annual confirmation). You will also be charged a fee of $86.25 (incl GST) at annual confirmation.
MBIE have announced an increase in FMA levies, which will be phased in over the next three years. As an indication, the FMA levy for financial advisers payable for annual confirmations that fall between 15 March 2021 – 30 June 2021 will be $345 (incl GST).
For full details, including the increased levy amounts (exclusive of GST) that will apply from 1 July 2021 and 1 July 2022, see the MBIE website.
Ongoing obligations
When the new financial advice regime starts, all financial advisers will be regulated under the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA). You will need to meet certain duties and obligations.
Duties
As a financial adviser, 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.
- At all times exercise care, diligence and skill.
- Comply with the new Code of Professional Conduct for financial advice services including competence, knowledge and skill requirements as well as requirements for ethical behaviour, conduct and client care.
- 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.
Code of Professional Conduct
Anyone giving advice to retail clients must comply with a new Code of Professional Conduct for financial advice services. This outlines the standards of ethical behaviour, 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 Professional Conduct in May 2019. It takes effect from the start of the new regime on 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 that 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
Competency safe harbour
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.
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.
Disclosure
You must disclose certain information to your financial advice provider’s clients to ensure they can make informed decisions.
You can view information about the disclosure regulations on MBIE’s website.
Liability and enforcement
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:
What you can do now
The new financial advice regime comes into effect in early 2021. Use this checklist to help you get ready as a financial adviser:
- If you haven’t yet decided how you want to operate in the new regime, you may find our Explore your options tool helpful.
- Start a conversation with a licensed financial advice provider (or authorised body) – this may be your existing employer.
- Make sure that your information on the FSPR, including your contact details, is up to date.
- Learn about your duties and obligations under the new regime, and our approach to liability and enforcement.
- Read the new Code of Professional Conduct to find out what competence, knowledge and skills you need under the new regime.
- Plan how to meet any skills or knowledge gaps, and understand how the competency safe harbour might apply to you – the financial advice provider you will be working for may be able to support you with this.
Useful links
