Partners Life’s Mark Banicevich says there is a proportion of financial advisers who remain unaware of all their obligations as a licence holder in the lead-up to the end of the new regime transition period. However, he says there are different strategies and resources advisers can employ to comfortably meet the FMA’s ongoing requirements…
By 15 March 2023, every financial advice provider (FAP) must have or operate under a full licence issued by the FMA. According to our analysis, by 1 February 2023, three quarters of FAPs – more than 1,300 entities and sole traders – had received their full licence.
However, many financial advice providers may be unaware of what they must continue to do to meet their licensing obligations going forward. A full licence is not “one and done”!
When you applied for your full licence, you may have told the FMA that you have approved and documented:
- Business continuity arrangements (BCP)
- Cyber security policy
- Training and development policy
- Fit and proper policy, conflicts of interest process
- Advice process
- Complaints handling process
- Record keeping process
- Conduct review process
- and possibly others (although you might use other names)
If you told the FMA that you have these documents, you told the FMA the date each was last reviewed, and the date each is due for its next review. You may have also given dates regarding testing your BCP.
From the time you receive your full licence, your FAP must continue to meet the conditions on that licence…
Are you keeping those promises? How do you ensure that you review your documented policies, processes and other documents regularly (e.g. annually)?
From the time you receive your full licence, your FAP must continue to meet the conditions on that licence. All licence holders have the same standard conditions (and some may have specific conditions, too).
Standard Condition 6 refers to ongoing requirements. It is most likely that the FMA expects you to continue to meet these licensing promises. They also expect you to be satisfied that all of your relevant outsource providers (such as your CRM, research tools, advice support systems, website, compliance provider, etc.) continue to enable you to meet your obligations (Standard Condition 4), so you will need some form of due diligence and review process.
If you are a director of a FAP, it is important that you do things, or receive information from your staff having done things, that gives you confidence that your business remains on track.
So how do you do that? How do you govern your business? If you implement strong processes and routines, this does not need to consume too much time. You should still spend the majority of your time caring for clients. So how strong are your processes? How well do you keep yourself to these routines?
You may find that training will help. Do you understand what governance is? This involves value-adding activities when you get away from the day-to-day, and spend time working on the business.
Do you know what compliance really is? Compliance comprises of the checks you perform to be confident that your business continues to meet all of your obligations. It is the angel on your shoulder. There are several training institutions serving our industry that can help you learn the skills you should have.
There are also several reputable compliance advisers you could engage to review your policies and processes to give you confidence that they are (or are not) working as they should, to keep you compliant with your obligations and running your business to your standards.
Here at Partners Life, we have an online programme to help FAPs (particularly those with five or fewer financial advisers) to document their policies and processes. Many FAPs found this programme a useful starting point for their business documentation. Contact us if you would like to learn more.
Mark Banicevich is Head of Industry Engagement at Partners Life and formerly worked at the FMA. At Partners Life, his role is to help advisers and adviser businesses understand and transition to the new regime. He also liaises with other industry entities, such as the Financial Services Council.
The information provided in this article is general information only. It is not intended to replace professional services from a lawyer, compliance services provider or consultant. If you need support on any of the matters raised in this article you should consult a specialist.