Australian financial service licence holders and their representatives will be able to operate in New Zealand without a local licence from the FMA, following the rubber stamping of the Financial Markets Conduct (Australian Licensees) Exemption Notice 2020.
The FMA says: “The exemptions will allow Australian licensees and their representatives to give financial advice to certain New Zealand retail clients from offshore on an unsolicited basis without getting a financial advice provider licence, and without complying with certain duties under the FMC Act, if the conditions under the notice have been met.”
The FMA opened a consultation on the proposal in August 2020 and a RiskInfoNZ poll revealed 63 per cent of those who voted were against the idea.
Among the requirements of the exemption are that an Australian licensee will need to:
- Hold a current Australian financial services license, be in the business of providing a financial service in Australia, and not have a New Zealand place of business
- Be registered as a financial service provider in New Zealand, and be a member of a dispute resolution scheme
- Take all reasonable steps to ensure its representatives submit to the New Zealand courts in respect of the relevant financial services
- Give the FMA written notice that it intends to rely on the Exemption Notice
- Have procedures that give reasonable assurance that the licensee and its representatives comply with relevant Australian regulatory requirements when giving regulated financial advice to a New Zealand retail client under the Exemption Notice
Lawyers at MinterEllisonRuddWatts say the comparable nature of the Australian regulatory regime – to that of New Zealand – provides an opportunity to leverage it without the costs of full compliance and dual licensing.
“Although there are noticeable differences between the FAA Exemption Notice and the Exemption Notice (for instance, the exemptions under the latter cover a wider range of obligations), it must be kept in mind that the financial advice regime as a whole will be undergoing substantial change under the FSLAA, and replicating the current exemptions would not have the same effect as they have now.”
The Exemption Notice will come into effect on 15 March 2021.
See our story: FMA Consults on Adviser Exemptions.