The Act provides exemptions for specific groups of people who may provide financial adviser services as incidental to their job. Their adviser activities fall outside the scope of the regulatory regime.
These people are not required to be registered or authorised. They are people who provide financial advice only as an incidental part of another business that is not a financial service, e.g. a sales assistant in a retail store giving advice to a consumer buying goods on hire purchase. See section 13 of the Act for further information.
There are also exemptions from registration and authorisation for other occupations/parties/entities who provide services which are not considered to be financial adviser services under the Act.
- lawyers, incorporated law firms, conveyancing practitioners, chartered accountants, tax agents, real estate agents, registered legal executives and registered valuers providing a relevant service in the ordinary course of business of that kind
- teachers, lecturers, journalists, State services employees providing a relevant service in the course of that occupation
- non-profit organisations providing a relevant service without charge in the course of the organisation's activities
- employers providing a relevant service to an employee in connection with a financial product made available through the employee's workplace
- trustee corporations providing a relevant service in the ordinary course of providing legal or financial services relating to the preparation or drafting of a will and estate management and administration
- those providing certain services in the course of a takeover offer under the Takeovers Code
- rating agencies providing certain services.
This is not an exhaustive list. For a complete list of financial adviser services not covered by the Act, go to sections 13 and 14.
Does the Act apply to investment property consultants?
When referring to 'investment property consultant' or 'property
consultant' we mean any person who advises clients on investing in
property, whether through a seminar, website or through other
means, and who may or may not be a licensed real estate
Direct ownership of property is not a financial product under the Financial Advisers Act, but in some cases the requirements of the Act will still apply to investment property consultants and property consultants.
Advertising and scope of services offered
If a property consultant offers to for example, 'design a
comprehensive investment plan' or 'take care of all of your
investment goals' the requirements of the Act may apply. The
offer might be in an advertisement, in a seminar, or to a potential
Only an Authorised Financial Adviser can provide an 'Investment Planning Service' under section 11 of the Act. This is where an adviser offers to design a plan that is based on an analysis of a person's current and future overall situation and identifies investment goals then provides recommendations on how to realise those goals. There is an offence of holding yourself out to be an investment planner without being an AFA who is specifically authorised to provide investment planning services.
FMA will also look at advertising that suggests investments other than property will be considered by a property consultant. This type of misleading advertisement may give rise to an offence under the Act.
Type of property investment offered
Some property investments are category 1 products under the Act
and generally require consultants to be authorised to provide
advice to clients. These are investments that are more complex than
where a person simply owns a house or a piece of land directly.
Direct ownership in property is not a financial product under the
Securities like property investment funds and certain contributory mortgage schemes are category 1 products as are land investment products. Land investment products are essentially schemes that involve an interest in land, are not otherwise category 1 products, and where the investor has no day to day control over the land involved. See the legal definitions of securities and land investment products.
Real Estate Agents
The exemption for real estate agents providing services in the ordinary course of business is only available to licensees under the Real Estate Agents Act. Real estate agents need to carefully consider whether any services they provide that include investment advice or planning could sensibly be considered as part of a real estate agent's job. Advice on complex property schemes or investment plans for example should be provided by AFAs who can conduct a proper suitability analysis for their clients.
Source of deposit and comparisons to financial products
Recommending or giving an opinion that a person should sell or
vary a financial product, for example specific shares or KiwiSaver,
to purchase a house is caught by the Act, as financial advice also
includes advice on the disposal or variation of a financial
product. FMA will look at situations where clients are being
advised to dispose of financial products in order to invest in
In addition where there is an analysis by a property consultant that compares the merits of financial products with property, it is likely to be financial advice.
It is an offence for financial advice to be provided by entities other than registered entities, or personalised financial advice to be provided by individuals who are not personally registered as financial advisers (or are QFE advisers).