Licensing fee increase

The Ministry of Business, Innovation and Employment (MBIE) gazetted regulations for the new regime yesterday which set the Financial Markets Authority levies and licensing fees for the new regime.

That has pushed the start of transitional licensing back from November 4 to November 25 because there must be at least 28 days between appearing in the New Zealand Gazette and coming into force.

The new regulations show that a sole adviser practice, with the adviser the only director, or one of only two, would 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. That compares to a base fee of $575 as proposed in December.

Bigger advice businesses, but those which do not have nominated representatives, will be charged $882.05 plus $178.25 per authorised body, compared to $730 proposed earlier.

Those with nominated representatives will be charged $1,060.30 plus $178.25 per authorised body, as opposed to $885 earlier proposed.

There will be per-hour charges for those applications that take longer than the allocated amount of time to process, although Commerce Minister Kris Faafoi has said he expects most applicants only to pay a flat fee.

He said the FMA would have the ability to recover the cots of "processing resource-intensive applications".

"They are slightly higher than the fees we consulted on in December 2018, due to an increase in the underlying costs associated with licensing. However, they are lower than the equivalent fees that authorised financial advisers pay in the current regime," an MBIE spokesman said.

The fees were set in June. A cabinet paper from Faafoi said: "I am confident that the costs are fair and reasonable and will be proportionate to the size and complexity of the various businesses that will operate in the new regime."

Financial Advice NZ chief executive Katrina Shanks said it was disappointing that the fees were higher than initially proposed but they were not cost-prohibitive to advisers staying in the industry. "That's the most important thing."

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.

It had initially proposed FAPs or financial advisers pay $460 at initial registration, then $230 for FAPs each year, $179 per nominated representative and $1,106 if the FAP gave advice on its own account.

"The majority of the FMA’s funding for these activities is recovered through a levy that is charged to financial service providers. I am proposing levies that have been designed to collect the same amount of funding from the financial advice sector," Faafoi's cabinet paper said.

Comments from our readers

On 25 October 2019 at 1:52 pm All hat no cattle said:

Dont forget that's only the fee.
There might also be a fee for processing the fee. And then the GST.

Last year my "annual confirmation" cost a $460 fee (this was the comparison in the consultation docs). But in real life I paid that PLUS the "annual confirmation fee fee" of $75. PLUS GST (though one might consider this to be neither a good, nor a service). So It was a total of $615.25

For AFAs the actual costs were; Criminal history check $40.25 PLUS Annual confirmation fee $75 Plus FMA Levy $330 PLUS GST = $506

In the consultation trans fees were $363 (plus this and that). So $405 is an increase to that already.

So on top of paying your annual confirmation for this year there will be
- Trans licence was $363 + GST now $405 followed soon after by Full Licence was $575 now $703.80.
- Plus register my company at $300 plus a Levy of $460
- Plus Companies Office "fee" $75 ???
- Plus criminal history checks???
- Plus whatever else?
so 405 + 703.80 + 460 + 300 + 75 + gst = $2235.37

Annual ongoing confirmations will be $258.75 for the FAP - was $230, plus $304.75 per adviser - $267
plus this, plus that (the fee fee), maybe a crimnal check, and then the GST icing on top.

Could be "prohibitive" for some.

On 30 October 2019 at 1:51 pm andy@themortgageshop.co.nz said:

"They are slightly higher than the fees we consulted on in December 2018, due to an increase in the underlying costs associated with licensing"

Why should the burden of uncontrolled spending rest on us, the advisers, when we had no say in the new legislation anyway?

On top of that, the FMA has just been granted an extra $4m to enable it to be more pro-active in prosecuting those who cannot get enough paperwork out to their clients; paperwork that they don't read anyway unless we go through it word-for word with them.

This is just turning into a bigger circus, and is getting further away from being "Client Centric".

Financial advisers will have to pay more than originally suggested to be licensed under the new regime, it has been revealed.

Friday, October 25th 2019, 6:00AM 2 Comments

Comments from our readers

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