FMA ponders advice exemptions

If you want to rely on alternative qualifications under the new regime, they'll probably need to be assessed by an NZQA-approved qualification developer.

Thursday, August 15th 2019, 2:01PM

Regulators are pondering what exemptions to the Financial Markets Conduct Act will be needed to support the effective operation of the new financial advice regime.

The Financial Markets Authority has issued a new consultation document ahead of the new rules coming into force next June.

“There may be some areas where we need to use our legislative tools (exemptions, designations, and frameworks or methodologies) to modify the standard requirements to support the effective operation of the new regime," it said.

It said it would generally be appropriate for standard requirements to apply to everyone giving financial advice.

Among the areas that it is looking at are alternative qualifications.

The FMA said it did not think it would need to continue exemptions for the CIMA designation, which offers an alternative to the qualification standards of the current code.

The regulator said the new code set competency at level five with different strands of the certificate for different types of advice.

"The new code does not have an alternatives schedule like the current code. However, it does have built-in flexibility. A person may demonstrate that they meet the required learning outcomes through an alternative qualification or experience if they can do this in an objective, measurable and independently-verifiable manner.

"In addition, a person can demonstrate the required learning outcomes by referring to a financial advice provider’s procedures, systems and expertise. A person who intends to rely on an alternative qualification or experience will need to get their qualification or experience assessed to see if they meet the relevant code standard."

The FMA said it did not expect it would consider alternative qualifications or experience to be equivalent to the requirements of the code unless they were independently verified by an NZQA-approved qualification developer.

"We are working through the process for assessment of alternative qualifications through discussions with the NZQA and NZQA-approved qualification developers. We are keen to see a process that keeps compliance costs to a minimum, and for any process developed to allow the single assessment of a qualification for the benefit of all persons with that qualification.

"We expect that the process (and costs) for recognising qualifications that have already been found to be equivalent for the purposes of the current code is likely to be straightforward. Given the built-in flexibility in the new code we don’t think future support from the FMA’s exemptions will be needed to recognise alternative qualifications."

Australian-qualified advisers are another group that will get attention.

At the moment, Australian advisers who are qualified to ASIC requirements are given recognition when they apply to be an AFA in New Zealand.

"We intend to explore whether continued recognition of Australian adviser qualifications is appropriate under the new financial advice regime," the FMA said.

"If it is then this could be put into effect by way of an exemption from certain competency requirements under the new code. However, given the significant changes to the financial advice regime on both sides of the Tasman, we intend to review the arrangements under this exemption and discuss continued trans-Tasman recognition with ASIC and FASEA."

After that, it would consult on any continued exemption for Australian-qualified advisers. Those who had already become authorised would be treated the same as any other AFA in the transition to the new rules.

Tags: ASIC CIMA FASEA Financial Markets Conduct Act FMA level five NZQA qualifications