Page last updated: 07 July 2022

Financial Advice Provider (FAP)

A financial advice provider (FAP) is an individual or entity (e.g. a company) that provides a "financial advice service". An individual or entity provides a financial advice service if they give regulated financial advice to their retail clients on their own account, or they engage others to give regulated financial advice to their retail clients on their behalf.

FAPs

8 steps to apply for a full FAP licence

This action plan sets out the key steps needed to apply for your Class 1 or Class 2 Financial Advice Provider (FAP) licence.

Use it to check your progress now and identify the steps you still need to complete to ensure you’re ready to apply by the target date of 30 September 2022. 

Download 8 steps to apply for a full FAP licence guide

OR APPLY FOR YOUR FULL FAP LICENCE NOW

All transitional and full licence holders and authorised bodies need to comply with standard conditions.

Standard conditions for FAP transitional licences 

Record keeping

You must create in a timely manner and maintain adequate records in relation to your financial advice service.

  • Your records must be kept in a manner that ensures the integrity of the information and enables it to be conveniently inspected and reviewed by us. This may be electronic.
  • Your records may be in any language providing you create and keep an accurate summary of the record in English and, if required by us, provide a full translation of the record into English by a translator approved by us
  • Your records must be available for inspection by us at all reasonable times and must be kept for at least 7 years from
    • The date the record is made; and
    • The date the financial advice to which the record relates is given; and
    • The date any later record is made that refers to or relies on information in the record.

Internal complaints process

You must have an internal process for resolving client complaints relating to your financial advice service that provides for:

  • Complaints to be dealt with in a fair, timely and transparent manner.
  • Records to be kept of all complaints and any actions taken in relation to them including the dates on which each complaint was received and any action was taken in relation to that complaint.

Download the standard conditions for transitional financial advice provider licences PDF.

Standard conditions for FAP full licences

Record keeping

Summary of what’s required

  • You must create timely and adequate records in relation to your financial advice service.
  • You must keep records for at least seven years.
  • Your records must be available to be inspected and reviewed by the FMA.

For more information, download the Standard Conditions for FAP full licences PDF.

Tools and help available

Internal complaints process

Summary of what’s required

  • You must have a process for resolving client complaints.
  • Complaints must be dealt with in a fair, timely and transparent manner.
  • You must keep records of all complaints, including the date the complaint was received and any action you took including if no action was taken then the reasons why.

For more information, download the Standard Conditions for FAP full licences PDF.

Tools and help available

  • To see what information you’ll need to provide when you apply for a FAP full licence, see the Complaints Handling section in the FAP full licence application kit.

Regulatory returns

This Standard Condition only applies to FAP full licences.

  • You must provide information to the FMA on a periodic or ongoing basis, or on request, in accordance with the requirements set out in a Regulatory Return Framework and Methodology. The requirements are presently not yet in place and the FMA will consult with the industry prior to publication of the requirements.

For more information, download the Standard Conditions for FAP full licences PDF.

Outsourcing

This Standard Condition only applies to FAP full licences.

Summary of what’s required

  • You must ensure that the providers of any systems or processes you outsource to are capable of performing the service to a standard that meets your licence obligations. The condition only relates to those outsource arrangements where you rely on the outsource provider to meet your licensee obligations.

For more information, download the Standard Conditions for FAP full licences PDF.

Tools and help available

Business continuity and technology systems

This Standard Condition only applies to FAP full licences.

Summary of what’s required

  • You must have and maintain an up-to-date business continuity plan that’s appropriate for the scale and scope of your financial advice service business.
  • If you use any technology systems that are critical to the provision of financial advice service you must ensure the information security of those systems is maintained.  You must notify us within 10 working days of discovering any material information security breach.

Tools and help available

Ongoing requirements

This Standard Condition only applies to FAP full licences.

Summary of what’s required

  • You must continue to satisfy the requirements for licensing at all times while you hold your full licence.  The requirements are specified in sections 396 and 400 of the FMC Act.  These requirements include (not an exhaustive list) your directors and senior managers remain fit and proper persons, you are capable of effectively performing its service, there is no reason to believe you are likely to contravene your obligations and you are registered on the FSPR.
  • There are similar requirements for your authorised bodies, including that arrangements are or will be in place to ensure that you maintain appropriate control or supervision over the provision of the service by the authorised body.

For more information, download the Standard Conditions for FAP full licences PDF.

Notification of material changes

This standard condition only applies to FAP full licences.

Summary of what’s required

  • You must notify the FMA if you implement any material change to the nature of or manner in which you provide your financial advice service.   The notification must be made, in writing, within 10 working days of implementing any such material change.  For example, if you change your compliance approach to relying on procedures, change your systems and expertise, commence to engage any financial advisers or nominated representatives where you were not previously permitted under your licence class, etc.
  • This notification requirement is in addition to the statutory notification obligation which requires notification of certain matters such as resignation or removal of directors, senior managers and key personnel of your organisation or an authorised body etc.  Refer to Regulation 191 of FMC Regulation and section 412 of the FMC Act for the statutory notification obligations.

For more information, download the Standard Conditions for FAP full licences PDF.

Duties

General reporting

Code of professional conduct

Competency safe harbour

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

If you’re engaging a financial adviser who was previously an authorised financial adviser (AFA), registered financial adviser (RFA), or QFE adviser, they may be able to take advantage of the competency safe harbour for two years up until 16 March 2023.

The competency safe harbour does not apply where

  • The FAP engages new financial advisers. ie any financial advisers who newly register on the FSPR from 16 March 2021 must meet the full competence, knowledge and skill standards set out in Part 2 of the Code, in order to give regulated financial advice to retail clients. (Note that if the new financial adviser is a former QFE Adviser an exception may apply (see above)).

Or where

  • The FAP engages nominated representatives and operates under a full licence. Any new nominated representatives it engages must meet the full competence, knowledge and skill standards set out in Part 2 of the Code, in order to give regulated financial advice to retail clients.

For more information, see the Competency safe harbour section of the Financial Adviser page.

Or visit the Code of Professional Conduct for financial advice services website.

Disclosure

As a part of the financial advice regime introduced in March 2021, there are new disclosure obligations for those providing regulated financial advice to retail clients.

These 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 in order to help retail clients find a provider that meets their needs (see regulation 229C).
  • We suggest that Financial Advice Providers with an internet site review its content to ensure that any references to the older Financial Advisers Act 2008 (for example, calling yourself an AFA) are removed.

Disclosures relating to advice

Certain other information must be given to retail clients when:

  • the nature and scope of the advice becomes apparent in order to enable clients to make an informed decision about whether to seek, obtain, or act on the advice (see regulation 229D); and
  • the advice is given (if not before) in order to help clients make an informed decision about whether to act on the advice (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)

More details about the information required to be disclosed can be found in Schedule 21A of the regulations here.

Requirements for form and manner of disclosure

The regulations include general requirements for the form and manner of disclosure (see regulation 229H).

All disclosures must be

  • presented in a clear, concise, and effective manner;
  • given prominence if presented with other information;
  • in a format, font, and type size that are easily readable if given in writing; and
  • free of charge.

You can also make information available or give information in the form and manner you reasonably consider appropriate, having regard to any stated purpose of the relevant regulation (see regulation 229H(3)).

For example, provided all other requirements are met, including a way to allow a recipient to readily store disclosure information in a permanent and legible form, disclosure of information through an email with a prominent hyperlink may be appropriate.

In this context, prominence may require a suitable warning as to the nature and importance of the information.

AML/CFT

Financial Service Providers registering or filing their annual confirmation on the Financial Service Providers Register are required to 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. Find out more about your AML/CFT obligations on the AML FAQ web page.

 

Financial advice providers must pay fees to the Companies Office (including FMA levies) when they register on the FSPR and when they complete their annual confirmation. These fees also apply to any authorised bodies or financial advisers you engage.

Levies

The Financial Markets Authority (Levies) Regulations 2012 (the Regulations), as amended in 2020, set out the levies payable by industry. The levies are set by the Ministry of Business, Innovation, and Employment (MBIE).

The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.

Levy Classes

A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.

  • A levy must be paid for every levy class the financial markets participant falls within. Levies are payable on the relevant leviable event as described in column 3 of Schedule 2 in the Regulations.
  • Some levy classes have been split in order to recognise the variations in size and nature of different financial market participants.
  • Most levies are paid when making an annual confirmation to the Registrar of Financial Service Providers (the Registrar).
  • Most levies are payable to the Registrar, via the (FSPR). However, some levies are payable directly to the FMA. This is set out in column 4 of Schedule 2 in the Regulations.
  • The following levy classes are invoiced directly by the FMA:
  • Levy Class 8, Levy Class 8A, Levy Class 10, Levy Class 10A and Levy Class 13.

The table below (see levy class description) provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations. 

Levy Class description

The table below provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations. 

Class Description
1 Persons making an application for registration on the   Financial Service Providers Register
2 Registered banks and licensed non-bank deposit takers
3 Licensed insurers
4 Licensed supervisors of debt securities and managed   investment products in registered schemes
5 Managers (of registered schemes)
6 Persons who undertook trading activities on licensed markets, contributory mortgage brokers, trading financial products or foreign exchange on behalf of other persons (other than persons included in class 6A, 6B, 6C or 6D, authorised bodies that only provide the service under a market services licence held by a person in class 6A or 6D and DIMS wholesale providers) or licensed derivatives issuers
6A Licensed discretionary investment management service (DIMS) retail providers
6B Providers of a regulated client money or property service (as defined in section 6(1) of the FMC Act) other than persons included in class 6(a) or 6C
6C Custodians and persons providing custodial   services
6D Crowdfunding service providers and peer-to-peer lending   service providers
6E Licensed financial benchmark administrators
6F Authorised bodies
6G Financial advisers
6H Licensed financial advice providers
7 All other financial service providers that are not included in any of classes 2 – 6H
8 Listed issuers (other than persons included in class 8A)
8A Small listed issuers
9 Lodgement of a product disclosure statement (PDS)
10 Licensed market operators
10A Licensed market operators that operate growth markets (other than persons included in class 10)
11 FMC reporting entities that lodge financial statements (or   group financial statements) and auditor’s reports
12 Accredited bodies
13 Licensed overseas auditors
14 Persons that apply for registration or incorporation under the Building Societies Act 1965; the Companies Act 1993; the Friendly   Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
15 Persons that are registered or incorporated and required   to make annual returns under the Building Societies Act 1965; the Companies   Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited   Partnerships Act 2008

Offences

It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.

Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:

  • provide services you are not registered for or state you are registered for a particular financial service when you are not
  • make a representation relating to any document or information required by the FSP Act or its regulations knowing that it is false or misleading, or omit any matter knowing such omission is false or misleading.

These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.

It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.

Levy waivers

We have discretionary power to waive a levy (in whole or part).

We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.

The waiver power is not intended to be used to revisit settled policy positions.

Once we receive a waiver application and the fee, we will assess it.  If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.

How to apply for a levy to be waived

You will need to email the following information to [email protected] with the subject line ‘Levy waiver application’.

  • Name of person or entity applying for the waiver.
  • Contact person for correspondence concerning the application including address, phone number and email.
  • Indicate the persons/entity who will receive the benefit of any waiver granted.
  • Specify which class(es) you seek a waiver from and whether a waiver is sought from the full levy or part and the amount thereof.
  • Let us know your preferred date for any waiver to take effect.
  • Explain why the waiver should be granted and why your circumstances are exceptional when compared with others in the same class.
  • Provide all relevant facts in support of your application.
  • Explain any regulatory benefit of FMA granting the waiver.
  • Give details of any previous contact with officials (including their names) at FMA or MBIE (including the Companies Office) on the matter.

How to pay your waiver application fee

You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.

The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.

We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.

Payment option How to pay Additional information
Electronic deposit or internet banking Where bill pay is available please select ‘Financial Markets Authority - Other'
Otherwise, our bank details are:
Bank: Westpac
Account name: Financial Markets Authority
Account number: 03-0584-0198005-000
To ensure we process your payment correctly please provide the following information:
Particulars: Payer’s name*
Code: Waiver
Reference: Applicant’s name
You do not need to forward a hard copy of your application if paying electronically

* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.

What are the fees

  • A payment of $1,265 should accompany each application.
  • This covers the application fee of $115 set out in the Financial Markets Authority (Fees) Regulations 2011 and an advance of $1,150 (including GST) for fees and costs to be incurred.
  • These regulations set out charging rates of $230 (including GST) per hour for time spent by FMA Board members and $178.25 (including GST) per hour for time spent by FMA staff.
  • These regulations are set by MBIE.

How long does it take

  • Once we have been provided with all relevant information, it generally takes around six weeks to process an application.
  • This may be longer if any policy questions arise.
  • If your application is urgent, please provide the date you need the decision by.
  • You must also provide reasons for requesting urgent consideration.

Granted waivers

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