First Capital was the 100th applicant through the Financial Advice Provider (FAP) full licence door, and their Class 2 application was approved on September 10. Managing Director Hugh Percy talked to the FMA’s Anita Frazer about his experience of the journey.
Anita: Hugh, thanks very much for agreeing to talk to us. Can I start by asking, why did you apply for your full licence now?
Hugh: For us, it was two things. One, we didn’t want to run the risk that we might get caught up in the rush at some stage and have to wait. And two, we wanted to use the full licensing application process as a bit of a benchmarking exercise to test ourselves. We wanted to ensure that we had all the policies and procedures required under the new legislation locked down. Then, if there was a shortcoming or something that wasn’t right, we could put it right now.
Anita: What does it mean to you and your business to have been granted a full licence?
Hugh: It gives us a degree of confidence that we’ve met those requirements of the new legislation. Through what we’ve set out in our application we know that our policies, processes, and procedures are robust and meet your (FMA’s) expectations, and we can now in confidence, focus on our clients.
Anita: I guess as a business with multiple advisers, applying for a Class 2 licence was the obvious choice. But can you tell us a bit about how you approached the application process itself?
Hugh: We just downloaded the application kit from the FMA website and worked through it methodically. We actually worked on it as a team to make sure we had multiple eyes across the whole thing and also because it gave the whole firm buy into the process and so they could see for themselves what we were doing.
For us, it was mostly about crystalising some of our existing business procedural practices – in most cases, we already had the majority of requirements in place but they weren’t necessarily as good as they could be or they weren’t documented, so we just dealt with each issue as it came up, saved a draft of the application, and once we were satisfied that we could meet the requirements in a way that we could be proud of, we pushed the submit button.
I think some people are thinking they have to down tools and spend six months doing this but that’s not the case at all; it’s easily incorporated into your day-to-day activities.
Anita: Do you have any pointers for other FAPs getting ready to apply?
Hugh: I would encourage people to ask for help if they’re having problems. Our advice community can tend to be a bit siloed but talk to someone who’s completed this process. Don’t struggle through it or be apprehensive about getting some guidance or tips if there are parts that you’re not sure about.
It shouldn’t be seen as an onerous undertaking, it’s about improving the way you run your business, the way you interact with your clients, and the overall outcome of that has got to be a good thing.
Anita Frazer is the FMA’s Head of Compliance Services for the FMA.
First Capital Financial Services is a privately owned financial advisory company, with financial advisers in Auckland, Wellington, and Christchurch. It provides specialist insurance and risk management, investment and portfolio management, UK Pension and employee benefits advice and prides itself on its innovative advice and solutions.