FEATURE
TRANSITIONAL LICENSING COMMENCES
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ransitional licensing has begun – and every adviser in the market now has to decide how they wish to proceed. From June next year, it will not be possible to give advice to retail clients unless you are working for, or are, a licensed financial advice provider. Advisers can work for a financial advice provider either as a nominated representative or a financial adviser. But some adviser groups are still trying to determine whether they want to provide a financial advice provider for their members to operate under – with the extra responsibility and potential cost that brings – or whether they will expect advisers to be responsible for themselves. At NZbrokers, Jo Mason said it would not apply for a licence. “We don’t give financial advice to retail clients. Our members are independent businesses with their own set of professional standards. We will recommend and publish a broker operations and guidelines manual template which the members will adapt to their practices. If we could implement a mandatory set of professional standards, we might have a different position.” She said the group supported the lift in standards that the new Financial Services Legislation Amendment Act (FSLAA), and its accompanying code of conduct for advisers would bring. “It will impose the need to determine a client’s preferences and a requirement to demonstrate the suitability of a product for each client. FSLAA and the code will impose other professional standards that will result in better record-keeping and client communications as well as advisers with a more rounded education about the financial services profession and the regulations that apply,” she said. “Most of our members already achieve these standards, with the exception of a competency measure, through qualification. For those members who do not always achieve the required standards, the new
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law will be a motivating element. For those who do not we will farewell them from the profession and their clients will be better advised by licenced and regulated general insurance brokers.” At Crombie Lockwood, plans were not yet in place. “We’re well underway with our planning and considering what we need to do to fully meet our obligations under FSLAA. However we’re not yet in a position to share or comment.” As well as regulatory responsibility for members, taking a financial advice provider licence will come at a cost. Transitional licences will be $450. Would-be FAPs must be registered on the Financial Service Providers Register and with the Companies Office with their relevant advice service before applying for their FAP licence. But when full licensing starts, the amount paid will depend on the size of the practice. A sole adviser practice, with the adviser the only director, or one of only two, will be charged $703.80 to apply for a full licence under the new regime, and then $178.25 for each entity that is proposed to be an authorised body under the licence. Bigger advice businesses, but those which do not have nominated representatives, will be charged $882.05 plus $178.25 per authorised body. Those with nominated representatives will be charged $1,060.30 plus $178.25 per authorised body. There will also be FMA levies to pay: $304.75 for adviser sand $258.75 for financial advice providers. Financial advisers will pay $304.75 in Financial Markets Authority levies and FAPs will pay $258.75 plus $205.85 for each nominated representative. FAPs who give advice on their own account will pay $847.55.
