Authorised body under a financial advice provider licence

Obligations for Authorised Bodies under a FAP Licence 

Regulatory Framework 

All financial advice providers are regulated under the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA). They must meet certain duties and obligations. 

Code of Professional Conduct 

Anyone giving advice to retail clients is subject to the Code of Professional Conduct for Financial Advice Services. This outlines the standards of conduct, client care, competence, knowledge, and skill required when giving regulated financial advice to retail clients in New Zealand. 

Go to the Financial Advice Code website

Ethical Behaviour, Conduct, and Client Care 

A person who gives financial advice must: 

•  Treat clients fairly 
•  Act with integrity 
• Give financial advice that is suitable 
• Ensure the client understands the financial advice 
• Protect client information 

Competence, Knowledge, and Skill 

A person who gives financial advice must: 

• Have general competence, knowledge, and skill 
•  Have particular competence, knowledge, and skill for designing an investment plan 
• Have particular competence, knowledge, and skill for product advice 
• Keep competence, knowledge, and skill up-to-date 

Duties 

If you give financial advice to retail clients, you must: 

• Take reasonable steps to ensure your clients understand the nature and scope of the advice being provided, including any limitations. 
• Give priority to your client’s interests where there’s a conflict of interest. 
• Exercise care, diligence, and skill at all times. 
• Comply with the new Code of Professional Conduct for Financial Advice Services. 
• Only recommend financial products that comply with the FMC Act and its regulations. 
• Ensure that any information provided to clients is not false, misleading, or incomplete. 

Additional Obligations for Authorised Bodies 

An authorised body that is a financial advice provider must: 

• Ensure compliance with all the duties listed above by anyone it engages to give advice under the licence. 
• Have appropriate processes and controls in place when engaging nominated representatives. 
• Ensure that no inappropriate incentives are given or offered to nominated representatives. 
• Comply with the standard conditions in the Financial Advice Provider licence and the general reporting condition. 

Competency 

As a financial advice provider, it’s your responsibility to ensure your advisers and nominated representatives meet the competence, knowledge, and skill standards set out in the Code of Professional Conduct. 

Disclosure 

Disclosure obligations for those providing regulated financial advice to retail clients are detailed in regulations 229A to 229J of the Financial Markets Conduct Regulations 2014. 

Publicly Available Information 

If a Financial Advice Provider has an internet site, it must make certain information publicly available to help retail clients find a provider that meets their needs (see regulation 229C). 

Disclosures Relating to Advice 

Certain information must be given to retail clients when: 

• The nature and scope of the advice becomes apparent (see regulation 229D). 
• The advice is given (if not before) to help clients make an informed decision (see regulation 229E). 

Complaints Information 

If a complaint is made, the person making the complaint must be given information about the complaints and dispute resolution process (see regulation 229F). 

Requirements for Form and Manner of Disclosure 

Disclosures must be: 

• Clear, concise, and effective 
• Given prominence if presented with other information 
• In a format, font, and type size that are easily readable if given in writing 
• Free of charge 

AML/CFT 

Financial Service Providers must declare if they are captured under the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act 2009 as a Reporting Entity and who they are supervised by. 

General Reporting 

An authorised body under a Financial Advice Provider licence must report to the FMA if: 

• It becomes subject to an insolvency event. 
• Relevant proceedings or actions are commenced against it. 
• Key personnel resign, are removed, or are appointed. 
• An auditor resigns or is appointed. 
• It proposes to change its name or legal structure. 
• It proposes to enter into a major transaction. 
• A transaction or arrangement results in a person obtaining or losing control of the authorised body. 

Annual Regulatory Return 

All licensed FAPs must complete and submit an annual regulatory return. Authorised bodies are not required to submit their own returns; the licensee will include their activities in the return. 

Standard Conditions for FAP Licences 

Record Keeping 

• Create timely and adequate records related to your financial advice service. 
• Keep records for at least seven years. 
• Ensure records are available for inspection and review by the FMA. 

Internal Complaints Process 

• Have a process for resolving client complaints. 
• Deal with complaints fairly, timely, and transparently. 
• Keep records of all complaints and actions taken. 

Regulatory Returns 

Provide information to the FMA periodically or on request, as required by the Regulatory Return Framework and Methodology. 

Outsourcing 

Ensure that outsourced providers can perform services to a standard that meets your licence obligations. 

Business Continuity and Technology Systems 

• Maintain an up-to-date business continuity plan. 
• Ensure the information security of critical technology systems. 
• Notify the FMA within 10 working days of any event impacting information security. 

Ongoing Requirements 

Continue to satisfy licensing requirements at all times, including maintaining appropriate control or supervision over authorised bodies. 

Notification of Material Changes 

Notify the FMA in writing within 10 working days of implementing any material change to your financial advice service. 

Authorised bodies under a financial advice provider licence are required to pay levies to the Financial Markets Authority (FMA). These levies are paid to the Companies Office on behalf of the FMA when the authorised body completes its annual confirmation on the Financial Service Providers Register (FSPR). 

Read more about levies, levy waivers and costs

The FMA is one of several organisations that has a role in enforcing the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA).

For an overview of what this means, see the MBIE fact sheets:

Liability in the financial advice regime [PDF]