FMA boss tells RFAs the clock is ticking and they better hurry up
Registered financial advisers have been warned by the regulator that the licensing clock is ticking and they better hurry up if they want to remain in business.
Monday, August 12th 2019, 6:00AM 
6 Comments
Financial Markets Authority chief executive Rob Everett has warned RFAs that they really need to be making some decisions around how they want to operate in a regulated environment as time is running out.
Transitional licensing opens on November 4 and closes six months later.
Everett says some advisers have been quite engaged but others are still asking "basic" questions and others don't seem engaged at all. He says around 50% of the RFA population haven't yet accessed the resources the FMA has put online to help them work out appropriate business decisions for their future.
"Not surprisingly with a sector that hasn’t been directly licensed before, what we’ve found is part of that sector have never really considered how they would fulfil some of the obligations that would be in the new regime."
Everett says RFAs need to be thinking about disclosing their obligations, keeping files, and other requirements that have already been spelt out.
"Some RFAs have been quite engaged in the decision making about whether they want to be under their own licence or another firm's licence," he says.
"Our impression is that there’s still a lot of RFAs that haven’t engaged with MBIE and with us. If they’re asking questions, they’re quite basic."
Everett says advisers understanding of what is required "is patchy, and inconsistent" and he compares it to what the regulator found with life insurance companies.
"Some of the RFAs are a long way away from where they’ll need to be ... it's going to be hard yards for some of them."
When asked about what portion are a long way away Everett responded: “I’m not sure we know the answer to that.”
The FMA's message to RFAs is: "It's doable and it's worth the effort but you need to get on with it."
Everett says transitional licensing itself isn’t "all that complicated, but there will be a point relatively soon next year when they’ll have to comply with the new requirements."
"So our message is that it’s not impossible to achieve the standards that are going to be set, but you need to start thinking through – do you want your own licensing, or do you want to be a part or a financial advice provider – because time will be running out pretty soon, the clock is ticking."
He says the purpose of the changes, which were not achieved by the Financial Advisers Act, was designed to get good quality and competent advice to more New Zealanders.
Some people have suggested the FMA should explain what will be required for full licensing to help advisers make long-term decisions on their future, particularly as transitional licensing is relatively straightforward.
Mason says that's a fair comment as "we haven’t published it".
However, he says there is enough information in the market place to give advisers a clear idea of what a full licence looks like. This includes finalisation of the Code of Conduct, education requirements and an adviser's duties which are set out in the Financial Services Legislation Amendment Act.
He says the FMA will detail the process for full licensing "as soon as we can".
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Comments from our readers
We are at significant risk of having a repeat of the AFA regulation back in 2010/2011, with a significant number not stepping up at the time or exiting that part of the industry.
This time round we have life insurance, where there's still a certain level of head-shaking going on hoping it's either not true or it'll go away. And then we have the General people where they got a pass last time round and have to not only come up to current life requirements but make it to AFA in one leap.
Not so bad fresh to the industry and joining an existing operator, quite different when you have been here a long time and think you know it and the goal posts have been move from the back field to Eden Park.
Good times right?
Which is to say that is a general association by number however there is the potential to link IP address and individual FSPR accounts.
However the latter requires a higher level of technical expertise and interdepartmental cooperation. Though technically relatively easy to implement when you know how.
My thought is do they need to? I know that at least 2 insurance companies are running programmes for advisers to help them get up to speed, not to mention the likes of Strategi.
here seems to me to be plenty of other avenues other than FMA and MBEI.
I don't doubt there is some apathy out there, but then that's essentially a human trait which may catch a few.
RFAs know that they really need to be making some decisions around how they want to operate in a regulated environment as time is running out.
Transitional licensing opens on November 4 and closes six months later.
Advisers have found information provided by a variety of sources, including FMA and MBIE about what is going to be required to be “patchy, and inconsistent".
Advisers have been saying that the FMA should explain what will be required for full licensing, to help advisers make long-term decisions on their future - because time will be running out pretty soon, the clock is ticking!
"The FMA are a long way away from where they’ll need to be ... it's going to be hard yards for them."
The RFA message to FMA is: "It's doable and it's worth the effort but you need to get on with it."
RFAs will fully engage with the process for full licensing "as soon as we can".
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Now, that is an interesting statement, which draws me to conclude that either the FMA is able to monitor and match inquiries to it's website with individuals/businesses, or something else. Given it's not a direct quote from to Everett,there are other possibilities.