As the 15 March deadline for the new Financial Advice Providers (FAPs) licensing regime nears, the Financial Markets Authority (FMA) has come to the party with a guide to the information that will be required when applying for a full FAP licence.
Only FAPs who have a transitional licence will be able to provide regulated financial advice from 15 March 2021. All FAPs will need to have a full licence by 15 March 2023. The process for applying for a full licence will be similar to that for a transitional licence. Applications will be online.
The level of detail and number of questions will increase with the licence class, and will cover:
- how the FAP intends to operate
- the amount of time the FAP has been operating and the number of current clients
- the type of advice and products advised on and how that advice is given
- how the FAP will ensure that all persons listed on the application meet “fit and proper” requirements
- whether the FAP has professional indemnity insurance (this was previously a standard condition but was removed)
- whether the FAP has a business continuity plan (in adherence with standard condition 5) to ensure the FAP may continue to operate
- whether the FAP has an approved cybersecurity policy
- how the FAP will ensure that all persons who provide advice under the licence meet the competency requirements in the Code (if you are relying on the competency safe harbour you will need to provide an explanation on this)
- how the FAP undertakes appropriate oversight and governance functions
- whether there is an approved process to handle conflicts of interest and, if not, how the FAP ensures client interests are prioritised, and
- whether there is a process to detail how documents are handled and, if not, how complaints will be handled.
You will not need to provide any supporting documents at the time an application is made but the FMA may ask for further clarification and/or documentation before deciding whether to grant the licence.
The presentation given by the FMA and Financial Advice New Zealand this week is accessible here. The key messages were:
- keep it simple – aim to have as few licences as possible and avoid “stacking” licences where more than one licence is used in a business structure, as this will push up fees and levies and will cause undue complexity
- if you are going to work for someone else, do due diligence on that person, and
- use the transitional period to get your licence structure right.
The FMA will release further guidance in the next few weeks and a toolkit on what will be asked.
Licence application fees and payment options
|Plus for each Authorised Body||$178.25|
All amounts include GST.
The fees must be paid on application and can be made by bank transfer (initially only Westpac NZ and BNZ are accepted), credit card or debit card.
Our commentary: Standard full licence conditions for financial advice providers