by Niko Kloeten
With just under 2000 AFAs nationwide, this number represents only 0.15% of the total number of advisers who have successfully become authorised.
As well as having to meet all the other requirements, prospective AFAs have to convince the FMA that they are of sufficiently good character to be authorised.
The FMA's power to decline authorisation for advisers on this basis was highlighted by a recent court judgment upholding its decision to reject PropertyTutors director Sean Wood's AFA application.
FMA head of primary regulatory operations Sue Brown said the low number of rejections was probably a result of advisers who knew they wouldn't meet the criteria deciding not to apply.
"Under the new FAA legislation, potential applicants understood before entering the application process what the requirements were. Consequently, a number who were unlikely to meet the requirements self-selected out of the industry.
"In addition, a number of advisers started the application process but did not complete it because they were unlikely to meet the requirements.
"FMA has declined to authorise three applicants who did not meet the requirements, the most public of whom was Sean Wood, whose appeal of FMA's decision was dismissed by the District Court."
The requirements for AFAs are more stringent than for advisers who only become registered; for example, they don't have to disclose foreign convictions.
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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