Frequently asked questions

Q: When will the new regime start?

A: The new regime will start in June 2020. See the Ministry of Business, Innovation and Employment’s timeline for more information.

Q: What are the minimum standards of competence, knowledge and skills I will need?

A: The standards of competence, knowledge and skill you must meet are set out in the new Code of Professional Conduct for financial advice services.

Under the transitional arrangements in the Bill, if you are already providing advice there is time built in to enable you to meet any new competency requirements.

You must continue to follow the standards set in the Financial Adviser Act 2008 until the start of the new regime.

Q: I am currently an RFA and would like to provide an investment planning service during the two-year transition period. How do I do that?

A: You should either:

• Become an AFA before the start of the transition period, or
• Ensure you meet all new competency standards under the new regime before providing the investment planning service.

For details of the proposed standards, keep an eye on the Financial Advice Code Working Group website. 

Q: What is the difference between a financial adviser and a nominated representative?

A: The legislation requires financial advisers to register on the Financial Service Providers Register, whereas a nominated representative does not need to.

Financial advisers and nominated representatives can both provide advice on behalf of a financial advice provider. However, nominated representatives will have less discretion than financial advisers and can only provide advice if the provider has sufficient processes and controls in place. These processes and controls must:

• limit the nature and scope of the advice given
• allow the financial advice provider to regulate the type of advice given and when
• ensure nominated representatives have the correct competence, knowledge and skill needed for the advice being provided.

Q: Can I be a nominated representative and a financial adviser?

A: No, you can be either a nominated representative or a financial adviser. To learn more about this, see section 431S of the draft Bill.

Q: Can I provide advice on behalf of more than one financial advice provider?

A: The legislation does allow for a financial adviser to work for more than one financial advice provider. However, these types of arrangements can lead to confusion for clients and there may be process issues to consider, such as how to manage complaints, privacy and disclosure. 

Financial advice providers will be considering these issues as part of their business planning. If you have decided you would like to provide advice under someone else’s licence we recommend you get in touch with them early to understand how they would like you to work under their licence.

Q: If I hold a transitional licence, can I engage nominated representatives to provide advice on my behalf?

A: Yes, if before applying for your licence you are:

• a QFE, or
• a firm registered on the Financial Services Provider Register that provides class advice through unregistered staff

Q: Should I apply for QFE status now?

A: Yes, if you would like to start providing services now that require you to have QFE status.

See also: ‘If I hold a transitional licence, can I engage nominated representatives to provide advice on my behalf?’

Q: If I want to engage someone to provide financial advice under my licence, do they need to be an employee?

A: No.

Being an employee is just one of many ways you can engage individuals to provide financial advice under your licence. How you choose to engage someone may vary based on your business structure and how you consider it most appropriate to oversee the financial advice provided on your behalf.

Q: Who needs a licence?

A: Financial advice providers giving advice to retail customers will need to have a licence.

If you are providing advice to wholesale clients only, you will not need a licence but certain duties will still apply – such as the duty to give priority to your client’s interest when there is a conflict, and to exercise care, diligence and skill when giving advice.

Q: What is a transitional licence?

A: A transitional licence is a licence you must have by June 2020 (the start of the new regime) if you are a financial advice provider giving advice to retail clients.  If you are not applying for your own transitional licence, you must operate under another financial advice provider’s licence.

Your transitional licence will be valid for up to two years. If you want to continue providing financial advice to retail customers after your transitional licence has expired, you must first have applied for and been granted a full licence.

If you do not get your transitional licence during the transitional licensing application period, you cannot provide advice to retail clients until you have a full licence – unless you provide advice under another financial advice provider’s licence.

The process for applying for a transitional licence will be more straightforward than the full licence application process.

We will keep you informed of timings and details when known.

Q: When will transitional licensing open?

A: We will start accepting transitional licence applications from Monday 4 November 2019. The application window will be open until June 2020, but we recommend you apply early to ensure you have your licence in time.

Q: What is a full licence?

A: A full licence is a licence you must have before your transitional licence expires if you wish to continue providing advice to retail clients.

If you are not applying for your own full licence, you must operate under another financial advice provider’s licence.

Full licence applications open at the start of the new regime. The application process will be more comprehensive than the transitional licence application process.

We will keep you informed of timings and details when known.

Q: When will full licensing open?

A: Full licensing will be open from June 2020 essentially forever. 

Q: I am currently an Authorised Financial Adviser and plan to become a financial adviser under the new regime; will I need a licence?

A: If you plan to provide financial advice to retail customers on your own behalf, you will need a financial advice provider’s licence.  

If you plan to provide advice on behalf of another financial advice provider, you won’t need a licence.

Q: I am currently a Registered Financial Adviser and plan to become a financial adviser under the new regime; will I need a licence?

A: If you plan to provide financial advice to retail customers on your own behalf, you will need a financial advice provider’s licence. 

If you plan to provide advice on behalf of another financial advice provider, you won’t need a licence.

Q: I am currently a QFE adviser; will I need a licence?

A: As a current QFE adviser, you won’t need a licence if:

• you plan to continue providing advice as a ‘nominated representative’ and
• your employer has a financial advice provider licence.

Q: How do I apply for a licence?

A: You will be able to apply for your licence online. We are currently developing the application form and preparing guides with details about how to apply. Once the form and guides are finalised we will share them with you.

Q: How much will a licence cost?

A: A transitional licence will cost $405 (ex GST) plus $38.75 (ex GST) for any authorised body named in your application. The cost of a full licence and ongoing annual levies will vary based on how you choose to operate in the new regime. See MBIE’s website for details.

Q: Do licence fees include GST?

A: The fees exclude GST. See MBIE's website for more detail. 

Q: What is the cut-off date for AFA applications?

A: It is still possible to apply to become an AFA up until the new regime takes effect in June 2020, however, we recommend you submit your application as soon as possible – and contact us to ensure we’re aware it’s pending.

While you can apply to be an AFA anytime up to the start of the new regime, we suggest you apply as early as possible to allow us time to complete your application – particularly if your application is received during the period we are assessing transitional licences.

If you have a question about the application process, please email questions@fma.govt.nz.

Q: How can I ask a question or give feedback?

A: You can email questions@fma.govt.nz or call us on 0800 434 567 (+64 3 962 2698).

Q: How do I book to attend a face-to-face session?

A: To book a free 45-minute session with us individually or to arrange a small workshop or presentation at your workplace, email questions@fma.govt.nz. When you email please give an idea what topic you would like to discuss.

Q: What can I be doing now to ensure I meet the new licensing requirements?

A: Once we have finalised our new licensing processes, we will share this information with you.

In the meantime, read:

• Who needs a licence, the first in a series of fact sheets to help you prepare for licensing.
• Our guide to the FMA’s view of conduct to find out why good conduct matters and what we expect from the providers we license or authorise.
• Our licensing overview report 2017 to find out what you need to know to meet your licence obligations and the steps you can take to ensure your application has a better chance of success.