New financial advice regime
The Government is proposing to make changes to how financial advice is regulated in New Zealand. The aim is to improve access to high-quality financial advice for all New Zealanders.
If you’re a business or individual offering financial advice and investment planning services, these changes affect you.
What’s Changing:
If the proposed changes go ahead:
The three current adviser types (Authorised Financial Adviser, Registered Financial Adviser and QFE adviser) will be removed and all advisers will need to meet the same standards.
The distinction between ‘class advice’ and ‘personalised advice’ will be removed.
The distinction between ‘category 1’ and ‘category 2’ products will be removed.
The requirement that advice can only be provided by a natural person will be removed.
The Financial Advisers Act 2008 will be repealed.
What this Means
When the Bill is passed the following steps will happen to implement the proposed changes:
First Phase
New Code of Conduct is approved by the Minister of Commerce and Consumer Affairs. New regulations are developed, consulted on and finalised.
Transitional licensing opens. The FMA will be accepting applications for approximately six months.
Full licensing opens six months after transitional licensing opens.
Transitional licences come into effect and all financial advice providers with retail customers must now hold a transitional licence. A transitional licence is valid for up to two years and enables financial advisers and nominated representatives 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.
To continue providing advice, all financial advisers and nominated representatives must be engaged by a financial advice provider with a transitional licence.
New regime and new Code of Conduct comes into effect.
All new obligations and duties apply.
Competency exemption comes into effect. You can continue providing the advice you were legally allowed to provide before the new regime came into effect while you work towards achieving the new competency standards.
You can now apply for a full licence.
Financial Advisers Act repealed.
FMC Act and FSP Act amended to reflect new regime (to the extent not already done).
Second Phase
After two years, the transitional licence period ends, all remaining transitional licences expire and advice can no longer be provided under a transitional licence. If you’re a financial advice provider, you must have a full licence to continue providing financial advice. If you’re not applying for your own licence, you must be engaged by a licensed financial provider who covers you under their licence. The competency exemption also expires and you must meet the competency requirements under the Code of Conduct.