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Incomplete Applications Slow AFA Approvals

Page last updated: 24 May 2011

Media Release
24 May 2011

Up to 700 financial advisers may have to stop giving advice on KiwiSaver, managed funds and other investment products on 1 July because they haven't completed the qualifications needed to be an Authorised Financial Adviser (AFA).

From 1 July 2011, financial adviser regulations come into full effect, making it an offence for unlicensed financial advisers to provide retail clients with personalised investment planning services and financial advice on investment products.

The changes are part of the Government's reforms of the finance services sector to improve investor protection and increase investor confidence in New Zealand's capital markets.

Financial advisers have been able to apply to be authorised since August last year. Despite the nine-month lead-in time Director of Financial Adviser Regulation, Mel Hewitson, says 700-plus advisers still haven't completed the competency assessments required.

"Nearly 400 of those need to do an assessment which can take three to five weeks to get through. It's clear they're running the very real risk they won't be authorised in time."

Ms Hewitson says her team is working hard to ensure advisers who have completed their applications will be processed in time for 1 July.

"We've set 17 June as our target date to process those advisers who have done the work and sent in full and complete applications.

"That gives advisers time to notify their clients they can continue offering investment services."

FMA warns it will be checking advisers who applied but didn't make the deadline and will take action against any person who holds themselves out as authorised after 1 July, who is not.

"FMA will not be providing further warnings to advisers who fail to meet their obligations on time."

Just over 600 advisers have been authorised to date. A list of AFAs is available on FMA's website.


Editors note:

FMA licenses and monitors Authorised Financial Advisers and Qualifying Financial Entities. Advisers wishing to offer retail clients personalised financial advice, discretionary investment management services in relation to category 1 products (which include investment products) or provide an investment planning service must be either an AFA or QFE adviser from 1 July unless they are an eligible Canterbury adviser affected by the earthquake, in which case the deadline is 1 October 2011.