AFA standard conditions
Authorised Financial Advisers (AFAs) must comply with their terms
and conditions of authorisation which include:
• Standard Conditions
• Any terms and conditions specific to the AFA
The Standard Conditions apply to all AFAs and are available on our
website with explanatory notes. FMA considers it part of your
professional obligations to be familiar with these conditions and
to understand your obligations which include providing us with
periodic reporting and notifications (see stories below).
See Standard Conditions and Standard Conditions incorporating
explanatory notes.
If you were authorised before May 2011 your annual ABS
confirmation is now overdue
Under the Standard Conditions of Authorisation AFAs must maintain
a current written Adviser Business Statement (ABS). Each year, you
must confirm to us that your ABS is current.
Confirmation is due 12 months after the date of your
authorisation. If you were authorised before <date> April
2011 and you haven't yet provided us with this confirmation, then
please let us have this by Friday 11 May.
For confirmation instructions see our web page.
You must notify us of 'significant matters'
The notification requirements in the Standard Conditions specify
that AFA's must notify FMA within five business days of 'any
significant matter concerning the AFA's authorisation'.
This includes a requirement to notify us of any matter that has
arisen since the date on which you were authorised 'which would
have been required to be disclosed at the time' of your application
to be authorised (or any subsequent application for
re-authorisation). If any significant issue arises for you, you
should consider making a notification to FMA.
Significant matters can include disciplinary actions or rulings
made by professional bodies or other forums, initiation of court
proceedings involving you or your company, convictions, and
liquidation or bankruptcy proceedings. This is not intended to be a
full list of matters.
For more see:
• AFA Authorisation Guide
• Guidance Note: Good Character and Criminal Convictions
Some reminders about disclosure
Disclosure is another key AFA obligation. Here are some of the
main issues we have been talking to advisers about on our recent
monitoring visits:
- You must stick to the prescribed format in the regulations.
Disclosure statements are not marketing material. They are intended
to provide easy-to-read information to help clients decide whether
to use an adviser and then whether to follow their advice. In a
primary disclosure statement no other additional text is allowed.
In a secondary statement there is more flexibility to include other
text however the prescribed information must be prominently
displayed. Remember the Code requires clear, concise and effective
dealings with clients as well as requiring advisers to ensure
clients have sufficient information to enable them to make informed
decisions.
- Joint disclosure statements are not permitted because no
regulations have been made to allow for this. Each adviser must
have individual, signed disclosure documents.
- Secondary disclosure should be provided in one or more separate
documents. A secondary disclosure statement is intended to be
relevant to the type of service the client is contemplating. We
have seen advisers providing all disclosure at once in a single
document. We don't believe this approach complies with the
regulations and we don't think it is helpful to the client.
For more information on disclosure see here.
Other recent news and website updates
• FMA's second consultation on effective disclosure is now
underway. Submissions close on Thursday 10 May 2012. See here.
• FMA has clarified how RFAs can use the term RFA or registered financial adviser in their advertising. See here.
• The Wellington District Court has dismissed an appeal by Sean
Wood against a Financial Markets Authority decision to decline his
application for authorisation as an Authorised Financial Adviser
(AFA). See here.
• A list of reporting entities under AML/CFT legislation has been
published. See here.
AFA Update emails - alerting you to your obligations
This periodic email provides information, guidance and feedback to
help you meet your obligations as an AFA. It is not intended to be
an exhaustive list of all AFA obligations on the topics discussed.
Please see our website for further resources and information
available for AFAs.