The FMA says it will be up to each financial adviser to apply for a full licence next year as the industry regulator will not contact transitional licence holders to ask if they want a full one.
Some of those working in the sector expected the organisation to start chasing down advisers once the new regime kicks in to see if they are ready to move across to a full licence.
But it seems it’s up to advisers to make the first move once they believe they meet all the requirements of a full licence from from 15 March 2021.
An FMA spokesperson says: “The FMA is not contemplating proactive calls with transitional licence holders to get them to apply for a full licence. It is up to advisers to apply.”
The FMA says:
- Obligations for licence holders and advisers come into effect from the start date for the new regime (regardless of licence type) – including new disclosure requirements
- A transitional licence is valid for up to two years (to 15 March 2023), by which time all FAPs need to be operating under a full licence
- Standard conditions for full licences (currently open for consultation) apply immediately once a FAP operates under a full licence
The regulator is considering eight standard conditions for full licences (See our story: FMA Announces Three Classes Of Adviser Licence):
- Record keeping
- Internal complaints process
- Regulatory returns
- Outsourcing
- Professional indemnity insurance
- Business continuity and technology systems
- Ongoing capability
- Notification of material changes
Rod Severn, CEO of Professional IQ College, says he expected the FMA to take the lead in moving transitional licence holders across to full licences. He also has concerns about advisers meeting some of the proposed licence conditions.
“The FMA will focus on eight standard conditions, and some of those will likely challenge some of the smaller operators who don’t have the resources to adhere easily to some of them.
“I think in particular, business continuity and technology systems, and ongoing capability will challenge some.”
Severn says many financial advisers run their practices on a mobile phone and laptop, and says data back-up may not be in use by everyone.
“When I talk to some compliance and resource service providers in New Zealand I can see there is still some way to go to meet the basics of the above requirements.”