A transitional licence is valid for up to two years and, along with the competency safe harbour, enables advisers to continue providing the advice they were legally able to provide before the new regime was introduced. This gives you time to meet any new competence, knowledge and skills standards needed.
If you do not get your transitional licence before the start of the new regime, you cannot provide advice to retail clients until you have a full licence – unless you provide advice under another financial advice provider’s licence.
If you’re not sure whether to apply for your own transitional licence, or operate under another financial advice provider’s transitional licence, use our Explore your Options tool to see some licensing approaches that may be right for you.
How your application for a transitional licence will be assessed
When you apply for a transitional financial advice provider licence, we will consider whether:
Your directors and senior managers are fit and proper for their roles
There is any reason to believe you may not meet your obligations
You will be registered on the Financial Service Providers Register (FSPR)
When does full licensing open?
Full licence applications open at the start of the new regime on Monday 15 March 2021. The application process will be more comprehensive than the transitional licence application process.
We will provide more details about full licensing closer to the time.
Your duties and obligations under the new regime
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 Act 2019 (FSLAA). You will need to meet certain duties and obligations. Most of these duties apply to everyone giving advice, but there are a few additional duties for licensed financial advice providers, particularly providers who engage others to give advice on their behalf.
Here’s the list of duties that apply to everyone who gives advice to a retail client:
Take reasonable steps to ensure your clients understand the nature and scope of the advice being provided. For example, you must explain if you’re only able to give advice about certain products
Where there’s a conflict of interest you must give priority to your client’s interests
At all times exercise care, diligence and skill
Comply with the new code of professional conduct for financial advice services including competence, knowledge and skill requirements as well as requirements for ethical behaviour, conduct and client care
Only recommend financial products that comply with the FMC Act
Ensure you follow the new disclosure regulations and that any information you make available to clients is not false or misleading
In addition, as a licensed financial advice provider, you must also:
Make sure anyone you authorise to give advice under your licence complies with all the duties listed above
Have appropriate processes and controls in place when you engage nominated representatives. These should allow you to control the advice being given and the circumstances in which it is given
Tell the FMA if you materially contravene your obligations and must also let us know if you change the legal structure of your businesses or make certain other changes, such as changes in directors or senior people
Comply with any licence conditions we may include when granting your licence
A transitional licence will cost $465.75 (incl GST), plus $44.56 (incl 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.