FMA opens consultation on new financial advice regime exemptions

20 August 2019

The Financial Markets Authority (FMA) is seeking feedback on proposed exemptions for the new financial advice regime.

Submissions on the consultation are due by 13 September.

The Financial Services Legislation Amendment Act 2019 (FSLAA) creates a new licensing regime to come into force in June 2020, at which stage any exemptions granted under the predecessor Financial Advisers Act will be revoked.

The FMA is seeking feedback on which exemptions should be carried through. For an exemption to be supported, the FMA must be satisfied that it is:

  • necessary or desirable to promote the purposes of the Financial Markets Conduct Act 2013 (FMCA), and
  • no broader than reasonably necessary.

Exemptions FMA proposes to continue

The FMA is proposing to continue with the exemptions for:

  • Australian licensees, and
  • overseas custodians who hold client money or client property relating to FMCA financial products, who are currently exempted from the requirement to get an assurance engagement with a New Zealand auditor.

It considers that both arrangements improve the functioning of New Zealand capital markets.

An exemption the FMA is considering

Australian advisers who are qualified to provide personal financial product advice to retail clients in Australia have those qualifications recognised when applying to be an Authorised Financial Adviser (AFA) in New Zealand, and where New Zealand has an equivalent licence.

The FMA is considering whether this exemption relief should be continued.

Exemptions the FMA is inclined to remove

The FMA is inclined to remove exemption relief for the following categories.

  • Recognition of alternative qualifications: Under the FSLAA, alternative qualifications are allowed for in the proposed Code of Conduct.
  • NZX and non-NZX brokers – client money and client property: FSLAA will allow for such relief through regulations.
  • Personalised digital advice: Under the FSLAA, personalised digital advice will be able to be provided as a licensed activity.
  • Offers of financial products through AFAs supplying personalised Discretionary Investment Management Services (DIMS): This relief duplicates an exemption in the FMCA and so is considered unnecessary.

Next steps

If you would like more information or assistance with making a submission, please get in touch with one of our contacts.

Quick Links

Financial Services Legislation Amendment Act – Introduced 8 April 2019

MBIE Guidance on the regulation of financial advice

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