FSLAA starts June 2020

Details of licensing requirements for advisers have been released.

Wednesday, June 19th 2019, 2:21PM 7 Comments

Kris Faafoi

The Government has agreed that the new regime will come into force in June 2020, with the exact date to be determined by Order in Council in the coming months.

Under the new regime anyone who gives financial advice to retail clients will be required to operate under a licence granted by the Financial Markets Authority (FMA). Application fees for these licences will range from $612 to $922 for a full licence, and $405 for a transitional licence.

“Businesses and individuals providing financial advice now have a year to prepare to meet the requirements that will apply in the new regime,” said Commerce Minister Kris Faafoi.

“We have several thousand financial advisers operating in New Zealand. Not only will this new regime level the playing field so they are all subject to the same rules and oversight it will increase the standard of financial advice across the board.”

Under transitional licensing, financial advice providers will be assessed on whether directors and senior managers are fit and proper and whether there is any reason to believe they might not meet their obligations.

When moving to full licensing, providers will have to show they are capable of performing the services they intend to provide.

"We want New Zealanders to be able to access good quality financial advice, because good financial advice can make a huge difference in people’s financial position and the quality of life they are able to enjoy," Faafoi said.

“New Zealanders also want to more easily understand adviser’s expertise, and to know that those who give them advice on their finances are skilled and subject to good regulation supporting good practice. This is good for the sector too because it will drive increasing levels of trust.”

Cabinet has also agreed to make changes to the registration requirements for the Financial Service Providers Register (FSPR). These changes will weed out some unscrupulous offshore-controlled operators who have traded on New Zealand’s good reputation by registering on the FSPR to give the impression that they are actively regulated here.

Tags: Financial Services Legislation Amendment Bill FMA

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Comments from our readers

On 19 June 2019 at 2:48 pm Comprehensive Planner said:

While I know current AFA's will get through the new regime without too much in the way of hassles, I equally know that current QFE Advisers will still be at the lower end of the educational scale and little will change for them. Current RFA's are being forced to decide which direction they will go in and so there is quite a few that will opt to accept the challenge to make the requisite changes to meet the higher standards.
I', not sure where Minister Faafoi is getting the idea that we will end up with some sort of level playing field for advisers. Bring it on and lets get this out of the way.

On 19 June 2019 at 3:12 pm AdviserMan said:

Great, just set up the application process and send us forms, so we can get on with it please?

On 19 June 2019 at 4:18 pm Murray Weatherston said:

If I've got this right, this announcement means that the implementation of the new regime has slipped by another 4 months.
Can't help myself asking the question "why?"

On 20 June 2019 at 10:04 am all hat, no cattle said:

This time frames doc was published in October last year https://www.mbie.govt.nz/dmsdocument/5427-what-are-the-expected-time-frames

It shows "Transitional Licensing applications open" By Q4 2019 and "NEW REGIME STARTS" in Q2 2020.

Checking the MBIE and FMA websites is no use, they have not been updated. There is only the press release on Scoop. Good. So, what does "come into force" mean? This is not the time to be vague!

If "come into force in June 2020" means the same thimg as "New Regime Starts" (transitional licensing applications close, full licensing applications open, FSLAA duties apply) then things are progressing at the tail end of the indicated time frames, but not 4 months behind.

If Mr Faafoi meant "Transitional Licensing applications open" in June 2020 then that's about 10 months behind that time frame doc.

So what did he mean? Do we have a year until transitional licensing starts, or a year before it ends? (Meaning TL will start by December)

On 20 June 2019 at 10:53 am DavidBeattie said:

Murray. In my understanding and reading, the new regime implementation date has always been communicated as some time in Q2 2020, so June just sneaks in.

On 20 June 2019 at 1:38 pm gavin austin adviser business compliance said:

The possible answer Murray is that both FMA and MBIE aren't ready ie no licensing process available and no regs for disclosure etc. I can't help wondering what they've been doing all this time.

On 28 June 2019 at 10:51 am Referee said:

We must congratulate Kris Faafoi for the getting through a huge workload in the short time he has had this portfolio. I'd suggest he has achieved more than anyone else assigned to tackle this financial reforms. Great work Kris!

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