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Consultation: New financial advice regime exemptions

Page last updated: 15 Aug 2019

Final date for submissions

5 pm Friday, 13 September 2019

Consultation document

Consultation: New financial advice regime exemptions

Submission form

Feedback form

E-mail for submission consultation@fma.govt.nz (please use the title of the consultation paper for the subject line)

Update

6 November 2019

After carefully considering submissions, the FMA has agreed in principle to:

1. Australian Licensees:

Grant exemptions for five years for Australian financial services licensees with no place of business in New Zealand and their representatives, to allow them to provide unsolicited regulated financial advice to retail clients in New Zealand from offshore.  Exact exemptions and conditions are still to be finalised.  However, the FMA has agreed in principle to grant exemptions from:

a)  the requirement in the FMC Act to be licensed to act as a provider of a financial advice service
b)  limitations in the FMC Act on who can give regulated advice to retail clients on behalf of a financial advice provider
c)  the prohibition in the FMC Act on holding out certain matters in relation to giving financial advice
d)  the duties in the FMC Act on persons giving regulated financial advice except:

      • the duty of care, skill and diligence;
      • the duty not to recommend an offer that contravenes the FMC Act or Regulations;
      • the duty to give priority to clients’ interests where there is a conflict;
      • the duty to ensure clients understand the nature and scope of the advice; and
      • the duties on financial advice providers who engage others to give advice to ensure compliance with the above duties.

The new exemptions will not extend to regulated financial advice given through a digital advice facility.

Conditions will largely replicate the conditions under the Financial Advisers (Australian Licensees) Exemption Notice 2011, subject to any changes that may be necessary or desirable in view of regulatory or other changes. 

We aim to have a notice in place to give effect to this decision well before the new regime comes into effect on 29 June 2020.

2. Overseas custodians of client money and client property:

Grant exemptions for five years for overseas custodians of client money and client property from new regulations to be made under the FMC Act[i], to relieve overseas custodians from the requirement to obtain an assurance engagement from a New Zealand qualified auditor that complies with requirements in the New Zealand regulations. Instead, they will be required to obtain an assurance engagement from an overseas auditor from a list of specified overseas jurisdictions that comply with requirements in that jurisdiction. The exemptions and conditions (and the overseas jurisdiction) will be substantially similar to those under the existing Financial Advisers (Overseas custodians – assurance engagement) Exemption Notice 2018.

We aim to have a notice in place (if required) after the new regulations have been made and before the new regime is effective on 29 June 2020.

3. Overseas custodians of scheme property:

Grant a five-year extension of existing exemptions for overseas custodians of scheme property under the Financial Markets Conduct (Overseas Custodians—Assurance Engagement) Exemption Notice 2018, to align the expiry date with expiry of the proposed new exemptions for overseas custodians of client money and client property.

Consultation on draft notices

We may consult with interested stakeholders on drafting of the exemption notices that will give effect to these decisions. If you would like to be added to the list of stakeholders please email your request to exemptions@fma.govt.nz. Please specify the exemption notice(s) you are interested in.

Australian qualified advisers

Under the Financial Advisers (Australian Qualified Advisers) Exemption Notice 2018, Australian advisers who meet the qualification requirements under ASIC's regulatory guides to provide personal financial product advice to retail clients in Australia are given recognition when applying to be an AFA in New Zealand. ASIC provides reciprocal recognition for New Zealand qualified advisers in its Regulatory Guide 146.

Given significant changes to qualification requirements for financial advisers on both sides of the Tasman, we intend to review the arrangements under this notice and discuss continued trans-Tasman recognition with ASIC and the Financial Adviser Standards and Ethics Authority Limited. Depending on the outcome of those discussions, we will aim to consult on proposals for continued exemption support (if any) in the first half of 2020.

Exemption support not necessary due to regulatory change

The FMA does not intend to continue exemption support provided by the following notices, as regulatory changes will mean that support is no longer required under the new financial advice regime:

  1. Financial Advisers (Certified Investment Management Analyst) Exemption Notice 2017
  2. Financial Advisers (Non-NZX Brokers – Client Money) Exemption Notice 2017 and Financial Advisers (NZX Brokers – Client Money and Client Property) Exemption Notice 2015
  3. Financial Advisers (Personalised Digital Advice) Exemption Notice 2018 and related amendment notices
  4. Financial Markets Conduct Act (Offers of Financial Products Through Authorised Financial Advisers Supplying Personalised DIMS) Exemption Notice 2015.

If you have any questions in relation to any of the above matters please contact us at exemptions@fma.govt.nz


[i]The Financial Advisers (Custodians of FMCA Financial Products) Regulations 2011 will be revoked on 29 June 2020 when the Financial Advisers Act 2008 is repealed. Those regulations set out key obligations for custodians including requirements regarding reporting, reconciliations, and assurance and reports. In June this year Cabinet agreed that those regulations would be carried over into the new financial advice regulatory regime with appropriate changes to reflect differences in the new regime.


15 August 2019

The Financial Services Legislation Amendment Act 2019 (FSLAA) will introduce a new regulatory regime for financial advice. We are considering where FMC Act exemptions may be useful to support effective operation of the new regime.

This consultation considers three matters where we think it may be useful to continue existing Financial Advisers Act exemption relief to support effective operation of the new financial advice regime:

  • Australian licensees
  • Overseas custodians – assurance engagements
  • Australian qualified advisers.

This consultation also considers matters where we think existing FA Act exemption support will no longer be required given expected changes in the law:

  • Recognition of alternative qualifications
  • NZX and non-NZX brokers – client money and client property
  • Personalised digital advice
  • Offers of financial products through AFAs supplying personalised DIMS.

We welcome your comments on the matters considered in the consultation document, and any additional matters that you believe should receive support from our legislative tools.