The FMA marked the final major milestone in the new financial advice regime on Friday 17 March, bringing to an end the transitional licensing phase. All financial advice providers (FAPs) must now hold or operate under a full licence from the FMA if they want to provide regulated financial advice to retail clients.
This follows a two-year transition period, since 15 March 2021, during which advisers were allowed to operate under a transitional licence.
Those requirements, brought in by the Financial Services Legislation Amendment Act (FSLAA), also include adherence to the Code of Professional Conduct for Financial Advice Services and its standards of ethical behaviour and competence, knowledge and skill.
All advisers must be part of an approved disputes resolution scheme, that clients can use for free in the event of any problems.
We want to acknowledge the considerable efforts of the thousands of New Zealanders who work in the financial advice industry…
FMA Director of Deposit Taking, Insurance and Advice, Michael Hewes, says it’s taken a lot of people a lot of work to get ready for the new regime in the four years since FSLAA was passed in 2019.
“We want to acknowledge the considerable efforts of the thousands of New Zealanders who work in the financial advice industry, as well as those who represent them at professional adviser bodies, and our public sector partners at MBIE, the Companies Office, and the Code Committee,” says Hewes.
“We’ve been impressed at how many advisers have recognised the opportunity and willingly done the work to meet the new requirements. Collectively, these efforts have further strengthened the sector as a whole.”
Hewes says more than 2,500 Financial Advice Providers either directly licensed or operating as an Authorised Body, as at 17 March 2023 – a number that includes licences issued to sole operators as well as small firms and large entities employing multiple advisers.
“The total number of advisers covered by those full licences will be known in June, once their details have been linked to each licence-holders’ registration on the Financial Service Providers Register,” says Hewes.