UP FRONT • REGULATION
Forwards to March 15 Transitional licensing figures look promising, and the FMA are ‘very pleased to see advisers taking the transition seriously’. BY DANIEL SMITH
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s summer draws to a close, and we move further in to 2021, the new regime will be a priority focus. Before the holiday break the FMA released their latest tally of licensing numbers which told a positive story for an industry where advisers were poised for change. Back in September 2020, things were looking shaky with over 2,000 financial advisers yet to apply for transitional licences. The end of year data shows a pre-holiday surge which saw 97% of advisers covered by a transitional licence. As of December 20 1,356 licences have been approved alongside 715 authorised bodies, meaning that well over 2,000 advisers have made the decision to engage with the new regime. Individual financial advisers covered by a transitional licence now number 9,157, giving some leeway for double-ups on the FSPR. Speaking late last year, FMA director of market engagement John Botica said he was happy with the results. “I am very pleased to see advisers taking the transition seriously and engaging [with us] in the process. With everything else that has been going on this year, all of the stresses and strains that 2020 has thrown up, advisers have really answered the call to be part of a regime designed to provide even better customer outcomes. “Up and down the country advisers make life better for their clients. They should rightly be proud. Licensing numbers show that the overwhelming majority are well on the way to being ready for the new regime.” Those 3% of advisers yet to gain their transitional licence have until March 15 to do so.
Updates to FSLAA regulations December 2020 saw a slew of supporting updates to FSLAA. Penny Sheerin, partner at Chapman Tripp says that advisers needn’t worry too much about these updates if they are on top of the changes for the new regime. “Really these updates are just the finer details. Tidy-ups to some of the wording 012
TMM 01 • 2021
transitional provisions to give affected providers time to update documents. • Prescribing eligibility criteria for an entity that wants to be an authorised body under a licence that covers a financial advice service.
‘Up and down the country advisers make life better for their clients. They should rightly be proud. Licensing numbers show that the overwhelming majority are well on the way to being ready for the new regime’ John Botica of the regulation. Updating terminology to reflect the new regime and a number of other quite administrative points. A lot of it is not ground-breaking new content.” But Sheerin notes that there is one area which advisers need to be mindful of. “One thing to note are the changes to the FSP Register, specifically around limitations that have been put in place to limit the misuse of the register. These changes have been talked about for a while but now they are manifesting in the upcoming regulations.” At the top of the changes to the FSLAA, are updates to the Financial Markets Conduct Amendment Regulations 2020. The key changes to this set of regulations are detailed below. • Replacing terminology from the Financial Advisers Act 2008 (FAA). • Replacing references to financial advisers with references to financial advice providers and including
• Carrying over the effect of the Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014 but with some updates and clarifications, and clarifying when assurance reports for assurance engagements must be obtained by custodians. • Prescribing limited circumstances in which a provider of a client money or property service is not required to hold client money and property separate from firm money or property including duties to protect the interests of clients. • Prescribing when firm money that is held together with client money is to be treated as client money. • Prescribing requirements for the record of nominated representatives that must be maintained by providers. • Prescribing the statement that lenders can give to make clear to consumers that the limited exclusion from the financial advice regime relating to lender responsibilities applies. • Continuing duties imposed under the FAA for former authorised financial advisers and qualifying financial entities to retain records. • Carrying over exemptions contained in regulations under the FAA. • Updating a cross-reference in the financial advice disclosure regulations so that financial advice providers are able to refer to their website for information about their legal duties. • Enabling financial advice providers to provide contingency discretionary investment management services (DIMS) without being subject to DIMS licensing requirements (and providing for transitional arrangements). This carries over
