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Frequently asked questions

Page last updated: 16 Apr 2019

Here we provide answers to some of the common questions about the financial advice changes. We cover legislation, licensing and how to request information. If you can’t find the answer you need, please email questions@fma.govt.nz.

Understanding the legislation

Q: When will the new regime start?

A: Parliament passed the Bill on 4 April 2019 and it received Royal Assent on 8 April 2019. The Act will come into force in stages. Exact dates will be determined once the Code of Conduct is approved, but the Ministry of Business, Innovation and Employment (MBIE) has advised there will be at least nine months to prepare before the new regime begins – this includes time for you to get your transitional licence.

As dates become more certain we will keep you informed.

Q: What are the minimum standards of competence, knowledge and skills I will need?

A: The Code Working Group is developing a new Code of Conduct for financial advice that will set standards of competence, knowledge and skill, ethical behaviour and client care. During October-November 2018 the Code Working Group consulted on a draft Code of Conduct for Financial Advice. Consultation closed on 9 November 2018. They anticipate publishing submissions on the draft Code in early 2019. The draft code gives an indication of what the minimum standard will be.

Under the transitional arrangements in the Bill, if you are already providing advice there is time built in to enable you to meet any new competency requirements.

You must continue to follow the standards set in the Financial Adviser Act 2008 until the start of the new regime.

Q: I am currently an RFA; should I complete my level 5 before the new regime starts?

A: The Code Working Group released a draft code for feedback in October last year.  This included details of the proposed competency standards you will need to meet under the new regime.

Keep an eye on the Financial Advice Code Working Group website for details of the submissions they received as part of the draft code consultation.

 

Q: I am currently an RFA and would like to provide an investment planning service during the two-year transition period. How do I do that?

A: You should either:

  • Become an AFA before the start of the transition period, or
  • Ensure you meet all new competency standards under the new regime before providing the investment planning service.

For details of the proposed standards, keep an eye on the Financial Advice Code Working Group website. 

Q: What is the difference between a financial adviser and a nominated representative?

A: The legislation requires financial advisers to register on the Financial Service Providers Register, whereas a nominated representative does not need to.

Financial advisers and nominated representatives can both provide advice on behalf of a financial advice provider. However, nominated representatives will have less discretion than financial advisers and can only provide advice if the provider has sufficient processes and controls in place. These processes and controls must:

  • limit the nature and scope of the advice given
  • allow the financial advice provider to regulate the type of advice given and when
  • ensure nominated representatives have the correct competence, knowledge and skill needed for the advice being provided.

Q: Can I be a nominated representative and a financial adviser?

A: No, you can be either a nominated representative or a financial adviser. To learn more about this, see section 431S of the draft Bill.

Q: Can I provide advice on behalf of more than one financial advice provider?

A: If you are a financial adviser, you can provide advice on behalf of more than one financial advice provider.

If you are a nominated representative, you can only provide advice on behalf of one financial advice provider unless the financial advice provider has an authorised body on their licence or uses a sub-contractor. If they do, you may also be providing advice on their behalf.

Q: If I hold a transitional licence, can I engage nominated representatives to provide advice on my behalf?

A: Yes, if before applying for your licence you are:

  • a QFE, or
  • an RFA firm providing class advice through unregistered staff – in the same way, you can under the FA Act

Q: Should I apply for QFE status now?

A: Yes, if you would like to start providing services now that require you to have QFE status.

See also: ‘If I hold a transitional licence, can I engage nominated representatives to provide advice on my behalf?’

Q: If I want to engage someone to provide financial advice under my licence, do they need to be an employee?

A: No.

Being an employee is just one of many ways you can engage individuals to provide financial advice under your licence. How you choose to engage someone may vary based on your business structure and how you consider it most appropriate to oversee the financial advice provided on your behalf.

About licensing

Q: Who needs a licence?

A: Financial advice providers giving advice to retail customers will need to have a licence.

Types of financial advice and advisers

If you are providing advice to wholesale clients only, you will not need a licence but certain duties will still apply – such as the duty to give priority to your client’s interest when there is a conflict, and to exercise care, diligence and skill when giving advice.

Q: What is a transitional licence?

A: A transitional licence is a licence you must have by the start date of the new financial advice regime if you are a financial advice provider giving advice to retail clients. If you are not applying for your own transitional licence, you must operate under another financial advice provider’s licence.

Your transitional licence will be valid for up to two years. If you want to continue providing financial advice to retail customers after your transitional licence has expired, you must first have applied for and been granted a full licence.

If you do not get your transitional licence during the transitional licensing application period, you cannot provide advice to retail clients until you have a full licence – unless you provide advice under another financial advice provider’s licence.

The process for applying for a transitional licence will be more straightforward than the full licence application process.

We will keep you informed of timings and details when known.

Q: When will transitional licensing open?

A: At this stage, the earliest we will start accepting transitional licence applications is three months after the Minister of Commerce and Consumer Affairs approves the new Code of Conduct for financial advice. We will keep you informed as dates become more certain.

Q: What is a full licence?

A: A full licence is a licence you must have before your transitional licence expires if you wish to continue providing advice to retail clients.

If you are not applying for your own full licence, you must operate under another financial advice provider’s licence.

Full licence applications open at the start of the new regime. The application process will be more comprehensive than the transitional licence application process.

We will keep you informed of timings and details when known.

Q: When will full licensing open?

A: We will start accepting full licence applications for a two-year period from the start of the new regime. As soon as we have confirmation of this date, we will share it with you. Based on current timings, we expect the new regime to start in quarter two, 2020.

Q: I am currently an Authorised Financial Adviser and plan to become a financial adviser under the new regime; will I need a licence?

A: If you plan to provide financial advice to retail customers on your own behalf, you will need a financial advice provider’s licence.  

If you plan to provide advice on behalf of another financial advice provider, you won’t need a licence.

Q: I am currently a Registered Financial Adviser and plan to become a financial adviser under the new regime; will I need a licence?

A: If you plan to provide financial advice to retail customers on your own behalf, you will need a financial advice provider’s licence. 

If you plan to provide advice on behalf of another financial advice provider, you won’t need a licence.

Q: I am currently a QFE adviser; will I need a licence?

A: As a current QFE adviser, you won’t need a licence if:

  • you plan to continue providing advice as a ‘nominated representative’ and
  • your employer has a financial advice provider licence.

Q: How do I apply for a licence?

A: You will be able to apply for your licence online. We are currently developing the application form and preparing guides with details about how to apply. Once the form and guides are finalised we will share them with you.

Q: How much will a licence cost?

A: MBIE is currently developing regulations that set the licensing fees and levies that will apply under the new regime.

They intend to complete their consultation on these regulations later this year. You will find information on how to engage in the consultation on MBIE’s website. You can also give feedback to MBIE at any time outside of the formal engagement processes.

Q: Do licence fees include GST?

A: The fees presented in MBIE’s discussion paper exclude GST.

Help and information

Q: How can I ask a question or give feedback?

A: You can email questions@fma.govt.nz or call us on 0800 434 567 (+64 3 962 2698).

Q: How do I book to attend a face-to-face session?

A: Look out for public invitations to events on this page and in our monthly FMA update.

To book an hour-long meeting with us individually or to arrange a small workshop or presentation at your workplace, email derek.grantham@fma.govt.nz. When you email please give an idea what topic you would like to discuss.

Q: What can I be doing now to ensure I meet the new licensing requirements?

A: Once we have finalised our new licensing processes, we will share this information with you.

In the meantime, read:

  • Who needs a licence, the first in a series of fact sheets to help you prepare for licensing.
  • Our guide to the FMA’s view of conduct to find out why good conduct matters and what we expect from the providers we license or authorise.
  • Our licensing overview report 2017 to find out what you need to know to meet your licence obligations and the steps you can take to ensure your application has a better chance of success.