You must operate under a financial advice provider licence
From the start of the new regime, you can only give advice to retail clients if you operate under a financial advice provider licence. You can hold your own licence, or you can work on behalf of someone else who holds a licence. Licensed financial advice providers can give advice directly (i.e. online), through financial advisers or through nominated representatives.
We will license financial advice providers. There will be two phases to the licensing process – transitional and full. This will make the changes smoother and more manageable, particularly in relation to competency requirements.
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 new Code will be available online once it’s been approved by the Minister of Commerce and Consumer Affairs.
New disclosure requirements
You must disclose specific information to your clients to ensure they are making informed decisions. The Ministry of Business, Innovation and Employment will consult on draft regulations shortly. Once we know the detailed requirements, we will share them with you.
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.
If you’re currently offering financial advice or investment planning services, these changes will affect you.
Why changes are happening
The Financial Services Legislation Amendment Act introduces changes to ensure the conduct and client-care obligations of financial service providers and the regulation of financial markets remain fit for purpose. It also addresses misuse of the financial service providers register by offshore entities. The changes are designed to:
remove regulatory boundaries, such as the current adviser classifications (AFA, RFA and QFE), the distinction between ‘class advice’ and ‘personalised advice’ and category 1 and 2 products
allow financial advice to be providedonline as well as in person
set industry-wide standards for conduct and competence
What this means
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Parliament is changing how we regulate financial advice in New Zealand. A number of government agencies are involved in this process. Below we outline which areas each of us is responsible for.