Legal Updates

Do you offer financial advice? You may want to read ours…

The Government has introduced a new financial advice regime that will likely impact any business or individual involved in the delivery of financial advice, services or products in New Zealand.

The Financial Services Legislation Amendment Act 2019 (“the Act”), which recently became law, aims to improve access to quality financial advice to all New Zealanders. 

The Act implements several changes to the regulation of financial advice, including:

  • A new code of conduct outlining the standard of conduct required when providing financial advice, that includes complying with standards of ethical behaviour, client care, and skill and knowledge;
  • New disclosure requirements to ensure clients are making informed decisions;
  • The removal of distinctions between class and personalised advice;
  • The removal of categories of authorised financial advisers (AFAs), Registered Financial Advisers (RFAs), and Qualifying Financial Entities (QFEs); and
  • New registration requirements.

Perhaps most importantly, from the start of the regime, advisers will only be able to give advice to retail clients if operating under a financial advice provider licence.

Licensing process

Licensing will operate as a two-step process, whereby providers will initially operate under a transitional licence and be afforded 2 years to obtain a full licence. The Financial Markets Authority (“FMA”) has publicised that from 25 November 2019, it will accept transitional financial advice provider licence applications.

The Government has also recently released new regulations implementing some previously proposed policies relating to the Act. The most notable announcement is that the regime commencement date will be 29 June 2020, at which point all requirements of the new regime will apply. This means all financial advice providers have only a short 7 month period to obtain a transitional licence.

Individuals and businesses involved in the delivery of financial advice, services or products will need to take steps to prepare themselves for the impending changes and apply for a transitional licence sooner rather than later.

If you have any questions about the implementation of the new financial advice regime, how it may impact your business, or require assistance with your licence application, please contact Sarah, Mark or Jono