UP FRONT | NEWS
Another milestone reached on the way to full licensing On June 15 the deadline for advisers to link themselves to a financial advice provider (FAP) passed marking another milestone on the journey to full industry licensing. In the coming weeks, the New Zealand Companies Office will begin to deregister those advisers on transitional licences who haven’t linked themselves to a FAP, set up their own FAP, or become an authorised body (AB) under another business’ FAP. While industry leaders say they have not seen much change in the overall number of advisers there has been a shift with some long-term advisers moving out of the industry and being replaced by younger people – many of them from banks, coming into the financial advice business. It was not all plain sailing for those slow to link to a FAP with both the Financial Markets Authority and Financial Advice NZ warning that at the start of June almost half of the industry‘s advisers had not yet linked. This was a concern as this part of the process was deemed to be fairly simple compared to what lies ahead in terms of the full licensing process. 06 | ASSET 03 | 2021
Financial Advice NZ chief executive Katrina Shanks said after that hurdle had been crossed advisers could take a breather before applying for full licences. “Once the FAP has linked [with] the adviser, then the adviser is pretty much good to go for the next two years,” she said. “They also need to make sure that the FAP has their dispute resolution guidance registered with the Companies Office. But after that they have until March 15, 2023, to obtain their full licence.” The good news is, according to the FMA’s head of compliance services Anita Frazer, obtaining a full licence is not as daunting as it may seem; but advisers should be working toward that goal now. She said of the 1,807 transitional licences approved only 32 applications for full licences had so far been received and the deadline of March 2023 was rapidly approaching. “So some haste please, we are not seeing enough momentum. “It’s a lifetime licence pretty much, but it’s also an iterative process so we don’t expect perfection the first time round but we urge you to all think about it now.”
Frazer says there are no surprises in the questions advisers need to complete for full licensing and they can be seen before filling out applications. Shanks reiterated Frazer’s call saying “... now we move into the full licensing process and have two years to do this, but that time will go very quickly”. “The sooner you apply for the full licence the sooner you can put all of this behind you.” Right now, the vast majority of advisers will be operating under a transitional licence with only a handful of businesses gaining a full licence. A transitional licence is valid for up to two years and, along with the competency safe harbour, enables advisers to continue providing the advice they were legally able to provide before the new regime was introduced. This gives advisers time to meet any new competence, knowledge and skills standards needed. If you did not get a transitional licence before March 15, you cannot provide advice to retail clients until you have a full licence – unless you provide advice under another FAP’s licence.
