Update
15 November 2019
After carefully considering all feedback and both regulatory and non-regulatory impacts, we decided to impose the two standard conditions below. These conditions will require Financial Advice Providers (FAPs) to maintain adequate records in relation to their financial advice service and have a fair, timely and transparent internal process for resolving client complaints.
More details about FAP transitional licensing and licence conditions are available here. Read the Regulatory Impact Statement and the submissions report for more information about the consultation and our decision.
We would like to thank everyone for their feedback and engagement.
Standard conditions
1. Record keeping
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Standard condition:
You must create in a timely manner and maintain adequate records in relation to your financial advice service.
Your records:
(a) must be kept in a form (which may be electronic) and manner that ensures the integrity of the information and enables it to be conveniently inspected and reviewed by us;
(b) 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;
(c) must be available for inspection by us at all reasonable times; and
(d) must be kept for a period of at least 7 years from the later of:
(i) the date the record is made; and
(ii) the date the financial advice to which the record relates is given; and
(iii) the date any later record is made that refers to or relies upon information in the record.
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Explanatory note: In this condition ‘you’ means the person who holds the licence and each of the licence holder’s authorised bodies and ‘us’ means the FMA. Records will be adequate if they clearly demonstrate (together with your systems, process and controls) how you, and any person engaged by you, and the regulated financial advice given to your retail clients by you or on your behalf, met the requirements relating to financial advice and financial advice services in the Financial Markets Conduct Act 2013, the Financial Markets Conduct Regulations 2014 and the Code of Professional Conduct for Financial Advice Services. Your records should include a record of all regulated financial advice given to retail clients by you or on your behalf. Records may be kept by another person on your behalf providing you ensure that person complies with this condition.
2. Internal complaints process
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Standard condition:
You must have an internal process for resolving client complaints relating to your financial advice service that provides for:
(a) complaints to be dealt with in a fair, timely and transparent manner; and
(b) records to be kept of all complaints and any action taken in relation to them including the dates on which each complaint was received and any action was taken in relation to that complaint.
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Explanatory note: In this condition ‘you’ means the person who holds the licence and each of the licence holder’s authorised bodies. A complaint relating to your financial advice service is an expression of dissatisfaction made to you or to a person engaged by you, relating to your financial advice service (including any regulated financial advice given to a retail client by you or on your behalf), or the complaints handling process itself, where a response or resolution is explicitly or implicitly expected. A complaint includes a complaint about a failure to provide a service or give advice. Any disclosure requirements relating to your internal complaints process are set out in the Financial Markets Conduct Regulations 2014.
25 June 2019
The FMA is consulting on two standard conditions we are considering imposing for transitional licences, as part of the new financial advice regime.
The Financial Services Legislation Amendment Act 2019 (FSLAA) will introduce a new regulatory regime for financial advice. Once the new regime comes into force in June 2020, anyone who provides regulated financial advice to retail clients will need to operate under a financial advice provider licence. There will be two phases to the financial advice provider licensing process – transitional and full. All transitional licence holders will need to comply with the standard conditions.
We seek your feedback on our proposal.
