If you are an authorised financial adviser (AFA) you must comply with a number of obligations when providing financial adviser services.
Register on time
You must annually renew your registration on the Financial Service Providers Register and notify the Registrar of changes. You must be a member of a dispute resolution scheme if providing services to retail clients.
Meet your authorisation conditions
An AFA must comply with the terms and conditions of authorisation which will include:
standard conditions subject to any modifications that the FMA considers appropriate
terms and conditions specific to the AFA.
Standard Conditions for Authorised Financial Advisers
Most terms and conditions will remain in place for the term of the authorisation. The conditions can only be varied during this time in the circumstances outlined below
FA Act Section
On application by an AFA (if approved by the FMA)
s55A(1) and (2)
If they are reporting or accounting standard conditions. Changes are subject to consultation
s147A(3) and 147E
For other standard conditions, in limited circumstances, such as in response to an emergency or where necessary to avoid the defeat of the purpose of the Financial Advisers Act. Changes are subject to consultation
s147A(3)(a) to (e) and 147E
If the business of the AFA has changed in such a way that there is a material risk to consumers; and/or the AFA has been or is involved in market practices that are in material respects inconsistent with the purpose of the Act
On an AFA's default
If an AFA applies to renew their authorisation new terms and conditions may apply.
Follow the Code
The Code of Professional Conduct sets out minimum standards and applies to all AFAs from the date of authorisation and while they remain authorised.
You must make both a primary and secondary disclosure when providing personalised services to retail clients. The principle behind disclosure is to provide the essential information your client needs to make an informed decision. It must not be misleading, deceptive or confusing. Any additional information you decide to provide to a client must not be misleading, deceptive or confusing either. For example, if you decide to provide accompanying information about your qualifications, make sure your client understands the relevance to the service they are considering. Find out more on your disclosure obligations.
AFAs have an obligation to be competent when they give advice (Code Standard 14) and must maintain and keep a current professional development plan (PDP) for each CPD period.
The CPD requirements for AFAs are not prescribed in detail and are instead principles-based. An overarching principle of CPD is that an AFA has the discretion to undertake professional training that best meets their individual needs.
The AFA ABS Guide was last updated in January 2015. The main changes from the previous version of the guide have been to reflect recent changes to the Code and the addition of information regarding the eligibility criteria for AFAs providing Personalised DIMS under the Financial Advisers Act.
Advisers providing personalised DIMS will need to ensure that their ABS contains all of the required information with respect to personalised DIMS. All other advisers should be mindful of the changes brought about by the amendments to the Code when they next update their ABS.
Under the standard conditions of authorisation, AFAs must maintain a current written adviser business statement (ABS). Each year, you must confirm to us that your ABS is current through the annual AFA information return.
You do not need to supply us with a copy of your ABS or specify any changes you have made to update your ABS. However, we may ask for a copy of an ABS at any time to assist in monitoring.
Make sure your advertisements are clear and true
A financial adviser must not advertise a financial adviser service in a way that is misleading, deceptive or confusing. This is in addition to the general requirement that a financial adviser's conduct in providing a service must not be misleading or deceptive (See sections 35 and 34 of the Financial Advisers Act (FAA).
If you’re a financial adviser, the fair dealing provisions of the FMC Act will apply to you. These are in addition to your obligations under the FAA.
These general obligations apply to all financial advisers including registered financial advisers. As well as traditional forms of advertising (e.g. radio, press, TV advertisements), advisers also need to consider whether messages on websites, business cards, signage and other communications might be seen as an advertisement. This will depend on the particular wording involved and the message conveyed.
However, this does not prevent AFAs from factually disclosing or otherwise representing they are an AFA. For example, AFAs can display their AFA certificate on an office wall or website or state on business cards that they are an AFA.
AFAs must also state on advertisements for financial advisory services that a disclosure statement is available on request and free of charge. (See section 30 of the FAA and the definition of advertisement in section 5).
You must provide a written risk assessment of the money laundering and financing of terrorism activity you could expect in the course of running your business.
You are required to implement an anti-money laundering and countering financing of terrorism programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism.
You are required to appoint a compliance officer to administer and maintain your programme.
You are required to perform due diligence processes on your customers. This includes customer identification and verification of identity.
You are required to report suspicious transactions.