Financial advisers were given a vote of thanks by the FMA during Financial Advice NZ’s first Bounce conference on Monday.
John Botica, the regulator’s Director of Market Engagement, told an online audience of 385 industry players that the past six months had “changed the world” and said he knows working through Covid-19 Alert Levels hasn’t been easy for advisers or their clients.
“It is you, the financial advisers, that I want to say ‘thank you’,” said Botica. “It is you who have kept on supporting your clients, and helped build their [financial] resilience.”
However, Botica quickly moved on to remind those watching that the start of the new financial advice regime is only five months away and that financial advisers need to “…act honestly, fairly, professionally, in the best interest of their clients, to provide practical, sensible, suitable advice, and not cut corners”.
Based on the number of applications for transitional licenses the FMA has received, there are about 2,000 financial advisers yet to apply. The regulator says processing times of applications – currently standing at around 10 working days – could take longer as the summer holidays interrupt the normal flow of business into the New Year.
“Don’t wait in the wings,” said one member of the FMA panel to advisers yet to apply for a transitional licence.
One question put to the panel of four during the online conference was a concern among some advisers that they’d be ‘red flagged’ by the regulator if they called asking for advice.
It’s something Michael Hewes, the FMA’s Supervision Manager, denied would happen and said the regulator wants advisers to succeed under the incoming regime.
“We want people to call us and ask questions,” he said.
Full licence
The process of applying for a full licence after 15 March next year was also raised by members of the online audience.
Botica explained it will be similar to applying for a transitional licence but will include more detailed questions tailored to fit particular businesses “…and that was our intent with the idea of licence classes”.
“There will be a lot more detailed questions on how you run your business, the processes you have in place, and governance,” he said.
“What we’re looking for is the degree to which you understand the obligations of holding a license, and that you have the appropriate processes to meet them.”
Transitional licence holders will have two years from 15 March to apply for a full licence.
“There’s no need to panic or be too concerned initially,” said Botica. “Use this initial time to start thinking around the plans you have in place now. And it’s okay to change as well, so a decision that you make now can be changed.”
Other obligations under the new regime include notifying the FMA if your adviser business materially changes.
Hewes said: “You must tell the FMA if you materially contravene your obligations, or let us know if you change the legal structure of your business. These are new obligations.”
On a question about the need for a governance board for an adviser businesses, the FMA says it is not planning to place hurdles ahead of small businesses and that it would be difficult to impose this level of governance on a sole operator.
An FMA spokesperson said after Monday’s conference ended that there is no “bright line test” or requirement for a company to appoint a governance board, “…a licence holder should consider the most appropriate way for them to ensure they are meeting requirements”.
