As part of the changes, the Government is removing the three current adviser types – Registered Financial Adviser, Authorised Financial Adviser and QFE adviser – and all advisers will need to meet the same standards.
The Act introduces a package of changes to the regulation of financial advice.
It sets out the duties that will apply to providers and individuals e.g. persons giving advice must prioritise clients’ interests.
The Act passed into law in April 2019.
The new regime for financial advice will come into effect in June 2020.
New Code of Conduct
Anyone providing advice to retail clients is subject to a new Code of Professional Conduct for financial advice services. This outlines the standards of conduct, client care, competence, knowledge, and skill you need to meet when providing financial advice in New Zealand. The Minister of Commerce and Consumer Affairs approved the Code of Conduct in May 2019.
New disclosure requirements
You must disclose certain information to your clients to ensure they are making informed decisions.
The Ministry of Business, Innovation and Employment aims to consult on draft regulations soon.
New registration requirements
To address misuse of the Financial Service Providers Register (FSPR), you will only be able to register as a financial service provider if you are providing services to New Zealand clients. This is a new requirement, which aims to improve client confidence and protect New Zealand’s good business reputation both at home and abroad.
The Companies Office is making changes to the Financial Service Providers Register (FSPR) to implement the changes to the registration requirements in the new regime.
There will be two phases to the licensing process – transitional and full.
The earliest we will start accepting transitional licence applications is three months after the Minister of Commerce and Consumer Affairs approves the new Code of Conduct for financial advice. We will keep you informed as dates become more certain.
Who will need a licence to provide financial advice?
You will need a licence if you want to be a financial advice provider and continue providing advice on your own account to your own clients – for example, you run your own business now and want to continue doing this.
You won’t need your own licence if you want to be a financial adviser or nominated representative who provides advice on behalf of another licensed financial advice provider – for example, you work for a financial advice firm or bank.
Already know how you wish to operate under the new regime?
There are 5 different ways to operate under the new regime. Obligations, reading material and costs are detailed out in each of the following:
Your obligations as a licensed financial advice provider
Holding your own licence enables you, and anyone covered by your licence, to provide regulated financial advice to retail clients. As a licence-holder, you will be regulated under the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Bill (FSLAB), and you will need to meet certain duties and obligations.
The Financial Services Legislation Amendment Bill has introduced some technical terms to describe the changes to how we regulate financial advice in New Zealand. The list here explains some of the most common terms.